Treasury Secretary Predicts $2 Trillion Stablecoin Market in Three Years

U.S. Treasury Secretary Scott Bessent has made a significant prediction regarding the future of the stablecoin market, stating that it could exceed $2 trillion in the next three years. This prediction comes as the bitcoin price has surged, reaching within striking distance of its all-time high of $112,000 per bitcoin, following a 50% increase from its April low. The market is bracing for a potential game-changer from the Federal Reserve, which could further impact the crypto market.

Bessent's prediction is based on the belief that stablecoin legislation backed by U.S. treasuries or T-bills will create a market that will expand U.S. dollar usage via these stablecoins all around the world. He stated that a $2 trillion market is a very reasonable number and that it could even greatly exceed that. This prediction echoes a report from analysts with Standard Chartered Bank, who earlier this year predicted that U.S. stablecoin legislation would boost the market to around $2 trillion, up from just over $200 billion currently.

Stablecoins, which are cryptocurrencies price-pegged to assets such as the U.S. dollar, have gained popularity as a way to move money around the world. However, the market remains unregulated, despite the surging valuations and profits of stablecoin issuers like Tether and Circle. Bessent's comments come as pressure on the U.S. dollar as the world's reserve currency is mounting due to the U.S. debt pile, which is on track to top $40 trillion in the next decade.

Last week, Tesla billionaire Elon Musk shared a warning from Coinbase chief executive Brian Armstrong that the spiraling U.S. debt pile could lead to the U.S. dollar losing its reserve currency position to bitcoin. Bessent echoed similar comments made by U.S. president Donald Trump and his administration, stating that the dollar's position will be strengthened by the adoption of dollar-pegged stablecoins. This week, the U.S. Senate voted 68 to 30 to move forward the so-called Genius Act that would regulate stablecoins, setting the bill up for a final vote that could happen as soon as Monday.

The bill's advancement has been named as a "tailwind" for the bitcoin price and wider crypto market. Joel Kruger, market strategist at LMax Group, stated that the Senate's recent approval of the Genius Act mandating 1:1 stablecoin reserves and offering regulatory clarity stands as a significant tailwind. Meanwhile, Wall Street banks are gearing up to enter the stablecoin market, expected to give legitimacy to the wider bitcoin and crypto ecosystem. Bank of America chief executive Brian Moynihan has said the passage of stablecoin regulation will allow the bank to enter the stablecoin market, stating that the problem before was it wasn’t clear they were allowed to do it under the banking regulations.