U.S. Treasury Projects Stablecoin Market Could Reach $2 Trillion by 2028

The U.S. Department of the Treasury has projected that the total market capitalization of U.S. dollar-pegged stablecoins could surge to $2 trillion by 2028, according to its Q1 2025 report published on April 30. The forecast underscores the growing role of stablecoins in digital finance and their increasing integration into the broader U.S. financial ecosystem.

Currently, the cumulative market capitalization of stablecoins stands at approximately $230 billion, but the Treasury notes that “evolving market dynamics” could significantly accelerate this growth trajectory over the next three years.

Stablecoins as “Cash On-Chain”

The report identifies stablecoins—cryptocurrencies pegged to traditional assets such as the U.S. dollar—as a key component of digital financial infrastructure, describing them as “ubiquitously utilized as ‘cash on-chain.’” This reflects their widespread use in decentralized finance (DeFi), cross-border payments, and trading platforms.

The Treasury’s endorsement of stablecoins’ utility as a new payment mechanism signals an increasing recognition of their role in digital finance, particularly in providing liquidity and stability across blockchain ecosystems.

Yield-Bearing Alternatives and Market Competition

Alongside stablecoins, the Treasury highlights the rise of tokenized money market funds as an emerging competitor. These digital assets offer yield-bearing features, making them attractive alternatives for users seeking both stability and returns—something traditional stablecoins typically do not offer directly.

The report emphasizes that legislative proposals under consideration may require stablecoin issuers to hold short-dated U.S. Treasury bills, further tightening the relationship between stablecoin issuance and U.S. government debt markets.

Demand for T-Bills and Banking Sector Implications

The Treasury previously noted, in a December 2024 policy statement, that stablecoins are contributing to increased demand for U.S. Treasury securities, particularly short-dated instruments. This is because stablecoin issuers commonly back their tokens with reserves comprising Treasury bills or Treasury-backed repurchase agreements.

The April report also warns that the rapid expansion of stablecoins could exert competitive pressure on traditional retail banks, potentially forcing them to raise interest rates to retain depositors.

Market Landscape: Tether and USDC Dominate

According to on-chain analytics firm Nansen, Tether’s USDt remains the market leader with a commanding 66% share, translating to a market cap of approximately $150 billion as of April 25. Circle’s USDC follows as the second-largest stablecoin, with a market capitalization of around $60 billion.

These two assets account for the vast majority of the stablecoin market and are central to the broader digital asset economy. Their backing by U.S. Treasuries reinforces a symbiotic relationship between crypto markets and traditional finance.

A Broader Embrace of Blockchain

The Treasury’s forward-looking stance on stablecoins adds to a broader trend of government engagement with blockchain technologies. Since the start of President Donald Trump’s second term in January 2025, there has been a noticeable shift in federal policy toward embracing tokenization and digital asset innovation.

The April report further cements this trajectory, highlighting how tokenized financial instruments and stablecoins may play a foundational role in reshaping U.S. financial infrastructure over the coming years.

Conclusion

With stablecoins increasingly serving as the digital equivalent of cash and their issuers becoming major players in U.S. Treasury markets, the Treasury’s projections point to a future where blockchain-based financial instruments are deeply embedded in traditional finance.

As regulatory clarity emerges and adoption accelerates, the stablecoin sector is poised for dramatic expansion—potentially reaching the $2 trillion milestone by 2028.

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