The Stablecoin market could begin to restructure traditional finance, according to Geoff Kendrick, head of Digital Assets Research at Standard Chartered.
Kendrick wrote in a memo Tuesday after a week-long trip to Washington, New York and Boston, saying that among crypto industry players, fund managers and policymakers the $75 billion mark is a turning point where it begins to affect government debt issuance, financial policies and the structure of the US property market.
The current Stablecoin market is around $240 billion. However, Kendrick's contacts expect it could more than triple by the end of 2026, by expanding clarity of use and regulations, especially if bipartisan genius behaviour becomes the law.
“In the US, as the Stablecoin market reaches a certain size, the amount of T-building needed to back up Stablecoins would need to change planned issuances across the curve towards issuing more T-building, longer tenors,” writes Kendrick. “This potentially affects the shape of the US Treasury yield curve and the demand for USD assets.”
Stablecoins – Cryptocurrencies, typically designed to maintain a fixed value of $1, are usually supported by cash equivalent reserves, mostly short-term US government debt. As demand rises, there is also the need to maintain large amounts of Treasury bills, placing stubcoins on a potential conflict course with traditional bond markets.
Kendrick met with a cross section of market participants during his visit to the US, including Bitcoin Miners, crypto-born companies, traditional hedge funds, and policymakers. Their almost meaningless focus: stablecoins.
Market participants expect a wave of ridiculous issuance, not just from crypto companies, but also from banks and local governments.
Emerging markets can be most immediately affected. Kendrick flagged concerns that individuals in these regions are using Stablecoins as digital savings vehicles, separating capital from local banking systems and central bank reserves. It could challenge the financial stability of a country that relies on US dollar liquidity to manage fixed exchange rates or capital management.
On the US front, stubcoins could be moved away from the corporate Treasury Department from traditional banks to a tokenized cash alternative. But how much of their cash business is in chains and how fast they are moving is still uncertain.
The growing attention has been reflected in the open market. Shares in Circle (CRCL), the issuer of USDC Stablecoin, have skyrocketed 540% since its publication last month. Landing demonstrates investors' trust in Stablecoins as a central pillar of the next phase of digital finance.
