Stablecoin growth to $4 trillion could reshape Treasury demand

Stablecoins could become a structural buyer of short-term Treasury bills, with Treasury Secretary Scott Bessent betting the $300 billion market grows to $4 trillion and lowers government borrowing costs.

"This could lower government borrowing costs," Bessent has written, citing projections that the stablecoin market could expand to nearly $4 trillion from about $300 billion today, according to The Wall Street Journal.

The connection runs through the Genius Act, the crypto law passed last year, which requires U.S. dollar-pegged stablecoins to back their value with assets including Treasurys maturing within 93 days. Banks hold only 8 cents of T-bills per dollar of assets, while a $1 stablecoin is typically backed by almost 80 cents of T-bills, according to a Brookings Institution review prepared for the Aspen Economic Strategy Group. The $300 billion stablecoin market remains small against the roughly $8 trillion U.S. money-market fund industry.

The stakes are large. In a bull case outlined by Citigroup's Citi Institute, a $4 trillion stablecoin market would see its Treasury bill holdings represent roughly a quarter of bills outstanding by 2030. The Senate is scheduled to begin procedural votes on the Clarity Act, the broader crypto market-structure bill, on Sept. 15.

Clarity Act Vote Looms as Crypto Stocks Rally

Trump hosted crypto executives at the White House last week to urge passage of the Clarity Act, which would divide regulatory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Among those attending were Coinbase Global CEO Brian Armstrong, Gemini's Tyler and Cameron Winklevoss, Payward co-CEO Arjun Sethi, and Robinhood Markets' Vlad Tenev. The SEC also proposed a new regulatory framework for crypto assets last week.

In anticipation, shares of Circle Internet Group, the issuer of USDC, and Coinbase Global, which offers rewards to USDC holders, both rallied more than 20% last week. The Clarity Act has stalled in the Senate over a dispute between banks and crypto companies about percentage rewards for holding stablecoins, which lenders view as competing with bank deposit yields. The bill cleared the Senate Banking Committee in May and passed the House in July 2025.

Treasury Demand Question Hangs on Stablecoin Stability

The Treasury's own bankers and investor advisory committee told the department last year that increased stablecoin issuance could create a new source of demand for short-maturity Treasury securities. Interest-rate strategists at TD Securities wrote in an October 2025 report that stablecoin growth could influence Treasury's debt management decisions, leading to a shorter weighted average maturity of issuance.

Still, the story remains early. The overall stablecoin market has plateaued, little changed from last October, according to data provider DefiLlama. The Brookings review flagged a critical question for the Treasury: whether new demand from stablecoins would be stable or volatile when determining the optimal debt maturity structure.

TD Cowen analyst Bryan Bergin said passage of the Clarity Act "would reduce friction via greater regulatory certainty," though he noted adoption was advancing without the law. Bergin said AI agent commerce would be a longer-term driver of stablecoin usage, with cross-border and business-to-business payments nearer-term drivers.

The path from stablecoin growth to lower government borrowing costs runs longer than a single presidential administration, as The Wall Street Journal noted. For now, the market is pricing the regulatory tailwind: crypto-adjacent stocks have surged, and the Treasury's debt management is already weighing stablecoin demand as a factor in how it structures issuance.

This article is for informational purposes only and does not constitute investment advice.