Goldman Sachs says potential stablecoin market could reach trillions of dollars

U.S. Treasury Secretary Scott Bessent believes stablecoins will play a growing role in supporting demand for U.S. Treasuries, and that the government will issue more short-term debt to meet that appetite, according to the Financial Times. The paper reported that Bessent has been telling Wall Street he sees stablecoins—digital tokens backed by high-quality securities like Treasuries—as an increasingly important source of bond demand.

The idea isn’t new. Back in July, Bessent said in a press release that he expected stablecoins pegged one-to-one with U.S. dollar instruments to provide critical support for Treasuries:

“This groundbreaking technology will buttress the dollar’s status as the global reserve currency, expand access to the dollar economy for billions across the globe, and lead to a surge in demand for U.S. Treasuries, which back stablecoins. The GENIUS Act provides the fast-growing stablecoin market with the regulatory clarity it needs to grow into a multitrillion-dollar industry.”

The GENIUS Act, rolled out last month, aims to harmonize state and federal rules on stablecoins, ensuring consistent oversight nationwide, the White House said at the time.

Goldman Sachs analysts argue this could mark the start of a stablecoin boom. In a new research paper, the bank’s Will Nance and colleagues noted:

“Stablecoins are a $271 billion global market, and we believe USDC [the token issued by Circle] is gaining share on and off Binance’s platform as ongoing legislation legitimizes the sector and the crypto ecosystem expands. Based on current trends and announced initiatives, we project $77 billion of growth in USDC from 2024 to 2027, a 40% compound annual rate.”