Stablecoin Market Set to Surge 770% by 2028, Driven by New Legislation

Standard Chartered, a prominent global banking group, has projected a significant boom in the stablecoin market, anticipating a surge from the current $230 billion to an impressive $2 trillion by the end of 2028. This projection comes in the wake of new legislation that is set to be implemented in a few months. The legislation in question includes the GENIUS Act and the STABLE Act, both of which aim to create a robust regulatory framework for stablecoins.

The GENIUS Act, a bipartisan effort, seeks to balance state and federal oversight, fostering innovation while ensuring compliance with 1:1 asset reserves, transparency, and anti-money laundering measures. The STABLE Act complements this by enforcing strict reserve rules and audits, thereby ensuring the stability and trustworthiness of stablecoins. These legislative measures are designed to protect users while promoting the growth of digital currencies, paving the way for secure stablecoin adoption.

According to Geoff Kendrick, the Head of Digital Asset Research at Standard Chartered, the implementation of these laws will catalyze an explosion in the volume of stablecoins outstanding. Kendrick estimates that this growth will necessitate an additional $1.6 trillion in US Treasury bills to be held as reserves, which aligns with the planned new Treasury bill issuance over the period.

This optimistic outlook is not isolated to Standard Chartered. Italy’s Economy Minister, Giancarlo Giorgetti, has also expressed similar sentiments, anticipating a rise in stablecoin adoption amidst the broader shift in crypto policies. Speaking at a financial forum, Giorgetti highlighted the convenience stablecoins offer for cross-border payments, independent of traditional banking systems. However, he also raised concerns about the potential threat to the euro’s global reference currency status, given the growing dominance of US dollar-backed stablecoins.

Giorgetti urged European leaders to expedite plans for the digital euro, a central bank digital currency (CBDC) designed to offer a homegrown alternative to dollar-based crypto payment tools. He warned that the appeal of stablecoins for savers, who seek risk-free assets and widely accepted means of payment without needing a US bank account, should not be underestimated.

In response to the growing dominance of US dollar-denominated stablecoins, traditional finance institutions are also making strategic moves. JPMorgan Chase, through its Onyx platform, has added British pound (GBP) accounts to its Kinexys blockchain-based payments network. This move addresses a significant gap in the stablecoin market, where over 95% of tokens are currently USD-denominated. By expanding Kinexys to include GBP, JPMorgan aims to position itself as a key infrastructure provider for stablecoin-like settlements in other currencies.

In summary, the stablecoin market is on the cusp of a transformative period, driven by new legislation and strategic initiatives from both financial institutions and governments. The projected growth from $230 billion to $2 trillion by 2028 underscores the potential of stablecoins to revolutionize digital payments and financial services. As the regulatory landscape evolves, stakeholders across the globe are positioning themselves to capitalize on this burgeoning market, ensuring stability, trust, and innovation in the digital currency ecosystem.