New projections from Coinbase suggest that the stablecoin sector could swell to $1.2 trillion by 2028.
Yet, this explosive growth raises questions about the ripple effects on US Treasury yields and global liquidity.
Coinbase Models $1.2 Trillion Stablecoin Market by 2028
The forecast comes as the stablecoin market progressively becomes one of the most critical battlegrounds in global finance.
Coinbase Head of Research David Duong outlined the firm’s methodology, leveraging 20,000 Monte Carlo simulations based on an autoregressive process (AR(1)) to forecast growth.
Based on the team’s findings, stablecoins could leap from the current $275 billion market capitalization to $1.2 trillion in just three years.
“This isn’t a ‘finger in the air’ forecast…Growing from $275 billion today to $1.2 trillion implies roughly $925 billion of net US Treasury issuance over approximately 175 weeks—or about $5.3 billion per week,” Duong explained.
Beyond highlighting the mainstreaming of stablecoins, such a trajectory displays their growing role in shaping global financial stability.
Experts React Amid Expected Pressure on Treasury Yields
Coinbase’s model suggests that a $3.5 billion inflow into stablecoins could compress three-month Treasury bill yields by two basis points (bps) within 10 days and as much as four bps within 20 business days.
This is because stablecoin issuers (like Circle and Tether) typically use a large portion of their reserves to buy short-term US Treasuries like 3-month T-bills to earn yield while maintaining high liquidity and safety.
However, bond prices and yields move inversely. As stablecoin issuers buy more T-bills, the price goes up, but the yield goes down.
While these effects may dissipate within weeks, the structural implications are significant. However, Duong clarified that the response is not exponential.
“It’s important to note that the response decays — effects don’t compound without bound. Multi-trillion-dollar money-market funds can reallocate between T-bills and the Fed’s overnight reverse repo facility, setting an effective floor for overnight rates,” he added.
While the Coinbase executive sees stablecoins as a threat to US Treasuries, Treasury Secretary Scott Bessent says otherwise.
According to Bessent, stablecoins could help boost demand for US treasuries. He said the crypto industry will become a crucial buyer of Treasuries in the coming years. Bessent’s prediction hinges on Washington’s push to shore up demand for new US government debt.
“Bessent has signaled to Wall Street that he expects stablecoins, digital tokens backed by high-quality securities such as Treasuries, to become an important source of demand for US government bonds,” the Financial Times reported, citing people familiar with the matter.
Market experts have weighed in on the projection. Messari CEO Eric Turner pointed out current growth trends and noted that the $1.2 trillion estimate is plausible.
“$1.2 trillion seems pretty reasonable if not conservative, based on what we’ve seen in 2025,” wrote Turner.
Similarly, Jordan Lawrence, CEO of Damisa, praised Coinbase’s use of simulation modeling and noted the importance of examining yield impacts alongside regulatory changes.
Meanwhile, RGG CEO Ben Lavi stressed that stablecoin issuers must evolve beyond transactional utility to sustain returns. Nevertheless, Lavi predicts that yield-sharing with clients will become inevitable.
“For the Stable market to reach a $1 trillion value, and even more, they will need to offer much more than just the ability to transact. Eventually, I project that the ROI for Tether and Circle will be the same as it is today because they will need to share the ROI with their clients,” Lavi stated.
Between JPMorgan’s Skepticism and Treasury’s Trillion-Dollar Optimism
The Coinbase projection sits between more cautious and more aggressive forecasts. JPMorgan recently warned the market may hit only $500 billion by 2028, citing limited adoption beyond crypto trading and DeFi.
Its report noted that 88% of stablecoin activity still occurs within crypto ecosystems, while just 6% is tied to real-world payments.
By contrast, the US Treasury and Standard Chartered are far more bullish. Treasury forecasts suggest a $2 trillion market by 2028, fueled by institutional adoption, tokenization of financial assets, and merchant integration.
Standard Chartered similarly sees a $2 trillion surge, spurred by new US legislation under the GENIUS and STABLE Acts, which will impose stricter transparency and reserve requirements.
Adding to the optimism, MEXC COO Tracy Jin predicts stablecoins could cross the $2 trillion threshold as early as 2026.
In a statement to BeInCrypto, the crypto executive cited strong demand amid macroeconomic uncertainty and fast growth in DeFi, cross-border payments, and digital asset trading.
Regardless of which projection proves correct, stablecoins are becoming a core pillar of modern finance. They already process trillions in transaction volume and dominate institutional OTC crypto trading, now accounting for nearly 75% of activity.
Their expansion into payments, merchant networks, and tokenized assets could further entwine them with the global financial system.
However, even in the face of this perceived growth, the road is marred with challenges. Italy’s Economy Minister warned that US-backed stablecoins may challenge European monetary sovereignty.
“The general focus these days is on the impact of trade tariffs. However, the new US policy on cryptocurrencies is even more dangerous, particularly that on dollar-denominated stablecoins,” Reuters reported, citing Giancarlo Giorgetti.
Against this backdrop, accelerated efforts to launch a digital euro could impede growth for US dollar-backed stablecoins.
The question is no longer whether stablecoins will scale but how they will reshape financial markets. Coinbase’s $1.2 trillion trajectory is plausible and consistent with Treasury dynamics.
However, policymakers say the challenge will be balancing innovation with stability as stablecoins grow from niche crypto tools into systemic financial instruments.
Will the market land closer to JPMorgan’s $500 billion, Coinbase’s $1.2 trillion, or the Treasury’s $2 trillion? The outcome, however it turns out, will influence bond markets, banks, and regulators alike.
The post Stablecoin Growth Could Shake Bond Markets — Inside Coinbase’s $1.2 Trillion Projection appeared first on BeInCrypto.
Source: https://beincrypto.com/coinbase-stablecoins-market-cap-treasury-yields/