Stablecoins Projected to Reach $2 Trillion by 2028, Raising Concerns Over US Dollar Value

Max Keiser, a prominent figure in the cryptocurrency world, has issued a warning about the potential risks associated with the growing stablecoin market. According to the US Treasury Borrowing Advisory Committee (TBAC), stablecoins could reach a market capitalization of $2 trillion by 2028, marking an eightfold increase from their current level of approximately $234 billion. This projection highlights the significant growth potential of stablecoins, which are digital assets pegged to the value of the US dollar.

Keiser, known for his advocacy of Bitcoin, expressed concerns that the expansion of stablecoins could exacerbate US debt levels and undermine the value of the US dollar. He described stablecoins as a "financial hospice" where fiat money like the US dollar goes to die, suggesting that increased usage of stablecoins could dilute the dollar's value and ultimately "work the US dollar to death." Keiser also linked the rise of stablecoins to increasing national debt, countering political promises of debt reduction.

The US Treasury acknowledged that stablecoin issuers would be required to hold short-dated Treasury bills under new regulations. This move is aimed at strengthening the correlation between US Treasury bill demand and stablecoin adoption. However, the Treasury also pointed out that stablecoin growth could compel retail banks to pay higher interest rates to depositors, potentially impacting the broader financial landscape.

Tracy Jin, the COO of MEXC exchange, agrees with the projection, suggesting that the $2 trillion milestone could be achieved as early as 2026. This optimistic outlook is supported by the growing adoption of stablecoins, which are increasingly being used as a means of exchange and store of value in the cryptocurrency ecosystem.

Geoff Kendrick, the Head of Digital Assets Research at Standard Chartered, noted that the US Treasury is using their $2 trillion stablecoin forecast for their own projection. Kendrick anticipates a surge in stablecoin issuance following upcoming US legislation and agrees with the Treasury's forecast. However, he cautioned that this growth will require an additional $1.6 trillion of US Treasury bills to be held as reserves, which is all of the planned new T-bill issuance over that period.

Tether, the issuer of the world's largest stablecoin USDT, is considering launching a US-only stablecoin by late 2025 or early 2026. Tether CEO Paolo Ardoino revealed that discussions are ongoing as the Trump administration aims to position stablecoins as strategic financial tools and make the US a global crypto leader. Ardoino described the US dollar as the best product the United States has ever created, emphasizing the potential for stablecoins to further solidify the dollar's dominance in the global financial system.

The rapid rise of stablecoins relative to the US dollar highlights their increasing dominance in the market. This trend is illustrated by the market cap of USDT, which accounts for over 60% of the total stablecoin market cap and has grown significantly since November 2023 compared to the Federal Reserve's currency in circulation, which remains almost flat. This shift underscores the growing legitimacy of crypto and the potential for Bitcoin to benefit from the resultant liquidity as institutional investors pivot to crypto over traditional assets.