Highlights

The expected passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (Genius) Act could lead to a substantial increase in stablecoin supply. Standard Chartered forecasts a dramatic growth from $230 billion to $2 trillion by the end of 2028. Such growth could significantly influence U.S. Treasury demand and reinforce dollar supremacy. This is especially relevant as stablecoins continue to play a vital role in cryptocurrency markets.

Sentiment Analysis

• The report conveys a positive sentiment towards stablecoin growth, with an optimistic outlook on market expansion.
• The potential impact on U.S. financial stability and dollar hegemony is highlighted with a constructive tone.
• The analysis reflects confidence in regulatory developments bolstering the stablecoin market.

Article Text

The stablecoin market is anticipated to experience substantial growth in the coming years, potentially reaching $2 trillion by the end of 2028, as predicted by Standard Chartered. This forecast is grounded in the expectation that the Guiding and Establishing National Innovation for U.S. Stablecoins (Genius) Act will soon be passed in the United States. Currently, the stablecoin supply stands at approximately $230 billion. However, the new legislation is predicted to nearly tenfold this figure. According to Geoff Kendrick and his team of analysts at Standard Chartered, the legitimizing effect of U.S. legislation will provide a significant boost to the industry.

Stablecoins are digital currencies that maintain a value pegged to assets like the U.S. dollar or gold. These cryptocurrencies are pivotal in the digital asset market for facilitating international money transfers and acting as a stable store of value. The report explains that a rise in stablecoin issuance will require the U.S. market to absorb an additional $1.6 trillion in Treasury bills over a four-year period. This would cover new treasuries issued during President Trump’s term. Moreover, with growing stablecoin reserves, the demand for U.S. dollars would strengthen, thus reinforcing the dominant position of the U.S. dollar globally.

Furthermore, Standard Chartered anticipates that the stablecoin industry will gravitate toward the reserve model employed by Circle, the issuer of USDC, the second-largest stablecoin. Presently, Circle maintains 88% of its reserves in Treasury bills with an average 12-day maturity. On the other hand, Tether, which is the largest stablecoin issuer, holds about 66% of its USDT reserves in Treasury bills. Such shifts in reserve management are expected to bolster the industry's stability and confidence further.

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