Cryptocurrency exchange Coinbase Global (COIN) sees the stablecoin market reaching $1.2 trillion U.S. by 2028.
The bullish forecast is based on a stochastic model simulating thousands of growth paths for the stablecoin sector in coming years.
Stablecoins are cryptocurrencies whose value is pegged to another asset, typically the U.S. dollar or price of gold.
To grow nearly five-fold from the current market size of $270 billion U.S., stablecoins will need to rely “on incremental, policy-enabled adoption compounding over time.”
Stablecoin issuers such as Circle Internet Group (CRCL) typically hold large portfolios of U.S. Treasury bills to back their tokens' value.
The growth to $1.2 trillion U.S. would translate into roughly $5.3 billion U.S. in new Treasury bill purchases per week, notes the Coinbase report.
Such inflows could lower Treasury yields over time by small but noticeable amounts. Also, redemption surges could have an adverse impact.
A $3.5 billion U.S. outflow in five days, for example, could lead to forced selling and tightening liquidity in the Treasury bill market, states the report.
Coinbase analysts say that recently passed stablecoin regulation passed in Washington, D.C. is critical to containing risks going forward.
The new stablecoin law comes into effect in 2027 and mandates one-to-one reserves, audits, and bankruptcy protections for the crypto sector.
COIN stock has risen 17% this year to trade at $300.28 U.S. per share.
