Stablecoins, long dismissed as the “boring” corner of crypto, are increasingly becoming a central lever in global markets. With issuers now holding vast amounts of short-term Treasuries, the sector is drawing comparisons to both a stabilizing force in dollar demand and a potential source of 2008-style liquidity stress.
Stablecoins Move Into the Spotlight
The market for stablecoins has nearly doubled over the past year, reaching $280 billion. Most issuers park reserves in short-dated U.S. Treasuries, meaning crypto liquidity is now tied more directly to Federal Reserve policy than ever before, according to OKX Singapore CEO Gracie Lin.
“Markets are still digesting Powell’s latest comments on rates, but the bigger story is stablecoins,” Lin noted. “They’ve built the rails — the next step is unification into a market that offers efficiency, depth, and real utility.”
Coinbase analysts project the sector could grow to $1.2 trillion by 2028, requiring $5.3 billion in new Treasury purchases every week. That inflow could marginally push yields lower. But the reverse risk looms large: a sudden wave of redemptions could force issuers to dump Treasuries, draining market liquidity.
The Debate: Stability or Systemic Risk?
The debate is dividing policymakers, investors, and academics.
- On Goldman Sachs’ Exchanges podcast, UC Berkeley economist Barry Eichengreen warned stablecoins could echo the panic of 2008. “When money market funds broke the buck at 97 cents, contagion spread, and the government had to step in,” he said.
- Former U.S. Comptroller of the Currency Brian Brooks countered that regulation has changed the game. He pointed to the new GENIUS Act, requiring one-to-one Treasury backing for stablecoins. “Supervision equals safety,” Brooks argued. “Every new token issued means another dollar of Treasuries bought.”
This tug-of-war highlights the macro dilemma. Stablecoins are shaving basis points off Treasury yields, but whether they prove a new engine of global dollar demand or a trigger for liquidity shocks remains unresolved.
Market Moves
- Bitcoin (BTC): Trading above $111,300, holding within a tight intraday range. Sentiment remains cautious as investors await clear macro signals.
- Ethereum (ETH): Trading at $4,320, up 0.6% intraday. Renewed demand in altcoins appears to be fueling ETH’s modest strength.
- Gold: Closed at a record $3,540 per ounce, lifted by expectations of a Fed rate cut and political pressure around U.S. tariffs. Gold’s role as a safe haven is back in focus.
- Nikkei 225: Edged higher, reflecting optimism amid strong foreign inflows and reforms. Analysts describe Japan’s equity momentum as a “stealth rally” drawing global capital.
Elsewhere in Crypto
- Jack Ma-linked Yunfeng Financial to build Ether reserves with an initial $44M ETH purchase (CoinDesk).
- Jito executives discuss implications of the SEC’s liquid staking ruling (The Block).
- Ethereum Foundation set to offload another 10K ETH following its SharpLink deal (CoinDesk).
Takeaway
Stablecoins are no longer just a crypto plumbing tool — they’re a growing force in global finance. The question is whether they evolve into a unifying source of dollar demand, or whether redemption shocks risk replaying the liquidity crunches of the past.