Stablecoins could generate between 0.8 and 1 trillion dollars of new demand for Treasury bills by the end of 2028, with total short-term demand including Federal Reserve purchases around 2.2 trillion dollars.

Current stablecoin supply sits near $300 billion and is poised to grow as regulatory frameworks mature and mass adoption accelerates; major issuers like Tether hold substantial U.S. T-bills.

If demand shifts from long-dated debt to short-term bills, the Treasury could suspend roughly $0.9 trillion of 30-year bond issuance for three years while keeping existing auction sizes.

The reallocation of supply could flatten or alter the yield curve, with an immediate bull-flattening risk at the front end and a base case of bear steepening through 2026, while front-end scarcity remains a risk.

Yield-curve shifts could include changes in long-term premia driven by term premia and rollover risk as stablecoin demand grows.

Regulatory momentum is rising alongside market shifts, with the GENIUS Act, SEC guidance on brokers’ capital treatment for stablecoins, and White House discussions shaping the environment.

Overall, stablecoins are framed as a significant factor in future debt financing and market dynamics, though substantial uncertainty remains from deficits, sentiment, and policy responses.

Macro risks include increased rollover exposure and concerns about fiscal dominance if market questions Federal Reserve independence, along with potential volatility if stablecoin demand falters.

The scenario appears cyclical rather than structural; even if 30-year auctions are suspended, it could still reshape short-term US debt markets, a move not entirely unprecedented given past pauses.

Wider use of stablecoins as everyday money for savings and purchases underscores growing mainstream adoption.

The GENIUS Act framework would require stablecoin issuers to hold high-quality liquid assets, with Treasuries central to liquidity, concentrating demand in the front end of the curve.

The GENIUS Act is viewed as supportive of the stablecoin market and U.S. government financing, fueling bullish expectations despite a stable stablecoin market cap around $300 billion.