BlackRock, JPMorgan execs predict $2 trillion stablecoin market by 2028 in note to Treasury

During a meeting last week, the Treasury Borrowing Advisory Committee—which comprises senior executives from BlackRock, JPMorgan, and other major financial institutions reporting to Treasury Secretary Scott Bessent—fingered the stablecoin market as a potential driver of Treasury demand. 

The committee predicted that by 2028, they might be worth $2 trillion, and almost all of them will be tied to the U.S. dollar.

According to them, current regulatory proposals could channel more stablecoin reserves into U.S. Treasuries, which would make them bigger holders than even China.

Legislature could make it necessary for stablecoins to buy U.S. Treasuries

Stablecoins have a lot of uses, but in order to make sure they are truly safe, the U.S. government wants them to hold their money in U.S. Treasuries, which means stablecoin companies like Tether and Circle will have to purchase a lot more of them in the coming months.

The demand this could create reportedly has the potential to surpass the $784 billion currently held by China, thereby reshaping how the U.S. finances its debt.

“The ultimate design and adoption of stablecoins will drive the magnitude of impact they have on U.S. Treasury demand,” the TBAC’s meeting minutes read.

To make this happen, the government is reportedly creating a new rule called the GENIUS Act. Think of it as a new rulebook that mandates stablecoin companies to buy Treasuries to back their digital dollars.

By designating T-bills with maturities under 93 days as eligible reserves, the proposed rules would position stablecoin issuers as key players at the front end of the curve. However, the Genius Act’s effect will not end there. It takes things further by allowing those Treasuries to be used as repo collateral—making them even more attractive as backing for stablecoins.

According to Forbes, the rule might take effect in August 2025. As it stands, foreign countries like China and Japan hold a lot of U.S. Treasuries, but their combined holdings do not reach the projected $2 trillion market cap of stablecoins by 2028.

That means if things go as expected, U.S. dollar stablecoin issuers may end up buying even more treasuries than China, which will help the U.S. government borrow money without depending on other countries.

Already, stablecoins are considered big players in the treasury market, with over $120 billion in short-term Treasuries backing stablecoins today, and another $90 billion in money market funds.

Unlike banks that run on fractional reserves, stablecoin issuers—under the proposed U.S. rules—would hold full reserves, which would make them a steady, transparent source of Treasury demand.

The Genius Act takes shape as China steps back from U.S. Treasuries

It is in the U.S.’s best interest to keep the dollar strong while making sure it can also borrow money easily. Stablecoins becoming the new, steady buyer of treasuries under the Genius Act could help, and the development is coming at an opportune time, as China has reportedly slowed the pace of its treasury purchases.

In fact, it is not just buying less, it is offloading its portfolio, with reports claiming its U.S. Treasury holdings have dropped from $1.32 trillion in 2013 to $784 billion.

The TBAC has suggested that stablecoin companies could easily fill the gap that countries like China leave behind, which means the U.S. would not have to worry as much about losing a buyer like China.

Countries like China like to buy U.S. debt because of the dollar’s position as the standard currency in international trade, and thus, is recognized as a low-risk investment.

There are claims that the dumping of China’s treasury holdings is its way of punishing the US for its tariffs, but there is no definitive evidence that this is what is happening.

For China to weaponize its holdings, it would have to sell lower than the market price, but that could have more global consequences than just devaluing the dollar.

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