The United States Department of the Treasury predicts that US Dollar-pegged stablecoins are poised to achieve a combined market capitalization of around $2 trillion by 2028, as outlined in the Q1 2025 report. Currently valued at approximately $230 billion, the Treasury anticipates that shifting market dynamics could propel stablecoins to hit the $2 trillion mark by 2028. Stablecoins are digital currencies pegged to traditional assets like the US dollar, serving as a new payment mechanism and widely used as “cash on-chain.” The emergence of tokenized money market funds has provided an alternative option to stablecoins due to their yield-bearing feature. This development underscores the growing influence and significance of stablecoins in the financial landscape. The US government has been increasingly embracing blockchain technology, especially since the commencement of President Donald Trump’s second term in office. The Treasury has previously endorsed cryptocurrencies, recognizing their potential to create a new financial market infrastructure and boost demand for US Treasury bills. Stablecoins like Tether (USDT) and USD Coin (USDC) invest in yield-bearing instruments such as US Treasurys, contributing to the growth in demand for short-dated Treasury securities. The Treasury’s April report highlighted that pending stablecoin regulations may mandate issuers to hold short-dated T-bills, further strengthening the link between stablecoin adoption and demand for US Treasury bills. The report also pointed out that the proliferation of stablecoins could lead retail banks to offer higher interest rates to depositors. As of late April, Tether’s USDT remains the dominant stablecoin, commanding a market share of around 66%. Tether boasts a market capitalization of about $150 billion, while USDC by Circle ranks second with a market capitalization of roughly $60 billion. The outstanding growth and influence of stablecoins underscore their role in shaping the future of the financial industry.