Stablecoin issuers may become some of the largest holders of U.S. Treasury securities, potentially surpassing key sovereign nations, according to a new report.
Citi, the global financial giant, forecasts that 2025 could mark a pivotal moment for blockchain adoption, driven by stablecoins — similar to how 2023 was a breakout year for artificial intelligence with the rise of ChatGPT.
“2025 could very well be blockchain’s ‘ChatGPT’ moment,” Citi’s analysts wrote in a report released earlier this week.
Central to this prediction are stablecoins, cryptocurrencies pegged to traditional currencies such as the U.S. dollar. Led by Tether’s $145 billion USDT and Circle’s $60 billion USDC, stablecoins have experienced rapid growth and are increasingly used in global payments and remittances.
Citi projects that the stablecoin market could expand to $1.6 trillion by 2030 in its base case, up from the current $230 billion, provided that regulatory frameworks and institutional adoption continue to develop. In its most optimistic scenario, Citi sees the market soaring to $3.7 trillion, though it also acknowledges that persistent structural challenges could limit growth, potentially keeping the market closer to $500 billion in a more pessimistic outlook.
A key driver of this growth is the U.S. regulatory environment, with a recent presidential executive order calling for the establishment of a federal framework for digital assets. Clearer regulations for stablecoins could allow them to be more deeply integrated into the financial system, facilitating faster payments, enhanced transparency, and more efficient asset settlements.
“This could lead to broader adoption of blockchain-based money, spurring additional use cases across financial and non-financial sectors in both the U.S. public and private sectors,” the analysts noted.
Stablecoin Issuers Becoming Major U.S. Treasury Holders
Stablecoins are expected to remain predominantly dollar-denominated, with Citi predicting that around 90% of stablecoins in circulation by 2030 will still be pegged to the U.S. dollar, reinforcing its global dominance.
This shift could have profound implications for the global financial system. Stablecoin issuers could emerge as major buyers of U.S. Treasuries, especially if regulations require them to back their tokens with low-risk, highly liquid assets like government bonds. Citi estimates that by the end of the decade, issuers could hold as much as $1.2 trillion in U.S. government debt, potentially surpassing all foreign sovereign holders.
Meanwhile, central banks in Europe and Asia are likely to continue exploring their own digital currencies, or CBDCs, the report highlighted.
Risks to Stablecoin Growth
Despite the optimistic outlook, the report also pointed to several risks that could hinder stablecoin growth. Stablecoins experienced nearly 1,900 instances of de-pegging in 2023, with over 600 of those affecting major tokens, according to Moody’s data.
In extreme cases, such as the mass redemptions following the collapse of Silicon Valley Bank (SVB) — which caused disruption for USDC — liquidity in the crypto market could be severely impacted, leading to forced sell-offs and ripples through broader financial markets.
