US Treasury has allowed the possibility of stablecoin capitalization to grow by 8 times in three years

What’s new? The US Treasury Department in a new report has allowed the possibility of a significant growth in the capitalization of stablecoins in the coming years. According to officials, market dynamics can create conditions for the growth of the indicator from the current $244,6 billion to $2 trillion by 2028. The authors of the report noted that stablecoins are already “ubiquitously utilized as ‘cash on-chain,’ effectively serving as a new payment mechanism.”

Treasury’s report

What else is known? In addition, the emergence of tokenized money market funds “has recently created an alternative option to stablecoins, primarily given their yield-bearing feature,” the report says.

Late last year, the Treasury Department acknowledged that the underlying technology behind cryptocurrencies enables “new financial market infrastructure,” potentially increasing global demand for US Treasury bills.

The dollar-pegged stablecoins, including Tether’s USDT and Circle’s USDC, the largest by capitalization, hold most of their collateral precisely in US debt securities.

The new report emphasizes that pending stablecoin legislation will “require stablecoin issuers to hold [short-dated] T-bills,” strengthening the link between the adoption of this type of crypto asset and demand for Treasury Department securities.

The report concluded by emphasizing that the growing popularity of stablecoins could put pressure on retail banks to pay higher interest rates to depositors.

Eric Trump: Banks could disappear in 10 years because of the growing popularity of blockchain technologies

The son of the US president noted that any aspect of the traditional financial system can be improved with the help of cryptocurrencies

Read more

Last month, the House Finance Committee passed a transparency and accountability bill for stablecoins, known as STABLE. The Senate is considering a separate stablecoin bill known as GENIUS.

They offer different approaches to regulation: STABLE emphasizes federal oversight, while GENIUS seeks to accommodate both federal and state regulations.

STABLE would impose a two-year moratorium on the issuance of stablecoins backed by independently issued digital assets, and require reserves to be kept separate from business funds.

GENIUS would create a legal framework for payments in stablecoins and encourage US issuers to leverage the dollar’s global dominance. It would strengthen AML rules, reserve, liquidity, and sanctions screening standards, and classify issuers as financial institutions.