Surge in demand for stablecoins may lead to a three-year suspension of 30-year Treasury bond auctions

LootboxPhobia · 2026-02-28T06:24:42+00:00

Stablecoin issuers are quickly becoming major buyers of short-term U.S. Treasury bonds. By the end of 2028, the market size is expected to reach $2 trillion, generating an additional $1 trillion in demand for short-term Treasury bonds. Treasury Secretary Scott Bessent may respond to supply shortages by increasing the proportion of short-term Treasury bonds, which could lead to a flattening of the yield curve.

LootboxPhobia

2026-02-28 06:24:42

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The issuer expects to drive an additional $1 trillion in U.S. Treasury demand

Stablecoin issuers are rapidly becoming the most important buyers of short-term U.S. Treasuries. Standard Chartered analysts believe this trend could fundamentally reshape the U.S. debt issuance landscape over the next three years.

By the end of 2028, the stablecoin market size is projected to reach $2 trillion. This growth is expected to generate up to $1 trillion in new short-term Treasury demand, as issuers seek high-liquidity reserves to back their digital tokens.

Although stablecoin growth has recently slowed following the passage of the US GENIUS Act, analysts see this as a cyclical slowdown. Combined with Federal Reserve measures, the total new demand for short-term Treasuries could expand to $2.2 trillion.

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This far exceeds the $1.3 trillion in new supply the Treasury Department expects if current debt ratios are maintained. Analysts warn that if the government does not intervene, short-term Treasuries could become “too scarce” for the private sector.

Treasury Secretary Scott Bessent’s Golden Opportunity

An estimated $900 billion in excess demand presents Treasury Secretary Scott Bessent with a unique tactical opportunity. The Treasury could choose to increase the proportion of short-term Treasuries to alleviate shortages at the front end of the yield curve.

Currently, short-term Treasuries account for 21.7% of total debt. While this is above recent recommended levels, it remains well below the post-WWII average of 26.1%. Increasing this ratio by just 2.5 percentage points could offset the additional demand.

Most notably, Standard Chartered points out that shifting this $900 billion supply from bonds to short-term Treasuries could have dramatic effects. Under the current auction schedule, this would effectively allow the Treasury to pause all 30-year bond auctions over the next three years.

Such measures could lead to a “bullish flattening” of the yield curve. While analysts’ baseline forecast for 2026 remains a “bear steepening,” they warn that the growing influence of digital asset reserves is a risk that bond investors must now closely monitor.

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