US Dollar-pegged stablecoins are on track to reach an aggregate market capitalization of approximately $2 trillion by 2028, according to the United States Department of the Treasury’s Q1 2025 report.
Stablecoins’ cumulative market cap currently stands at roughly $230 billion, but “[e]volving market dynamics [have] the potential to accelerate stablecoins’ trajectory to reach ~$2tn in market cap by 2028,” the Treasury said in the April 30 report.
A stablecoin is a cryptocurrency whose value is pegged to a traditional asset like the US dollar. According to the report, such tokens are already “ubiquitously utilized as ‘cash on-chain,’ effectively serving as a new payment mechanism.”
Additionally, the emergence of “tokenized [money market funds] has recently created an alternative option to stablecoins, primarily given their yield-bearing feature,” the report reads.
Related: Stablecoins boosting demand for US T-bills: Treasury Dept
Embracing tokenization
The report is the latest example of how the US government is embracing blockchain technology, especially after US President Donald Trump commenced his second term of office on Jan. 20.
The Treasury previously endorsed cryptocurrency in December, noting that the technology promises to create a “new financial market infrastructure,” potentially increasing global demand for US Treasury bills. US Dollar-pegged stablecoins such as Tether (USDT) and USDC (USDC) invest fiat backing into yield-bearing instruments such as US Treasurys.
“[B]ecause most stablecoin collateral reportedly consists of either Treasury bills or Treasury-backed repurchase agreement transactions, the growth in stablecoins has likely resulted in a modest increase in demand for short-dated Treasury securities,” the Treasury said in December.
In its April report, the Treasury said that pending stablecoin legislation would “require stablecoin issuers to hold [short-dated] T-bills,” thus solidifying the link between stablecoin adoption and US Treasury bill demand.
The report also noted that the proliferation of stablecoins could put pressure on retail banks to pay higher interest rates to depositors.
As of April 25, Tether’s USDT is the dominant stablecoin, commanding approximately 66% of market share, according to a report by researcher Nansen.
The token has a market capitalization of roughly $150 billion, according to CoinGecko. Circle’s USDC ranks second, with a market capitalization of approximately $60 billion as of April 30.
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