$1 Trillion Stablecoin Tsunami by 2028—How Digital Dollars Could Upend the Fed’s Playbook

The quiet coup of finance is happening in plain sight. Stablecoins—those unassuming crypto tokens pegged to real-world assets—are on track to process $1 trillion in payments annually within three years. And Washington might not be ready for the fallout.

When private money moves faster than policy

These blockchain-based dollar clones already settle more transactions than some national payment systems. Their 24/7 global rails don't care about banking hours, borders, or the Federal Reserve's meeting schedule. Traders use them to dodge wire delays. Migrant workers bypass predatory remittance fees. Now imagine that firehose of liquidity pointed at commercial paper markets or Treasury auctions.

The monetary policy wildcard

Central bankers still treat stablecoins like a curious sideshow—but what happens when a critical mass of dollar transactions occurs outside their control? The report suggests we'll find out by 2028. Maybe then the suits will realize that monetary sovereignty isn't something you can lose to a bunch of coders... until it's already happening. (And no, your CBDC powerpoint won't save you.)

The stablecoin market has exploded from $4 billion in 2020 to over $280 billion today, with monthly settlement volumes reaching $1.39 trillion in the first half of 2025.

Major stablecoin issuers already rank 17th globally in U.S. Treasury holdings, surpassing countries like South Korea, Germany, and Saudi Arabia in their impact on government debt markets.

Speaking with Cryptonews, Kevin de Patoul, CEO of Keyrock, predicts that regulatory clarity will accelerate adoption, stating that “legal certainty is the starting point, as without it, even the most advanced technology struggles to gain traction.”

Stablecoin Infrastructure Replaces Legacy Payment Architecture

The report reveals how stablecoins are evolving into comprehensive payment networks through the “stablecoin sandwich” model, which streamlines cross-border payments using a fiat on-ramp, stablecoin transfer on-chain, and a fiat off-ramp layer.

This architecture effectively replaces correspondent banks with programmable bridges that settle instantly across borders.

Virtual accounts represent a new approach, creating digital USD accounts that mimic U.S. bank accounts but run on stablecoin infrastructure.

These accounts allow self-custody while reducing reliance on local banking systems, with provisioning taking minutes instead of weeks for entrepreneurs in emerging markets.

Major fintech companies are launching proprietary stablecoins to control the full payment stack, streamline reconciliation, and leverage existing distribution networks.

Circle has expanded into orchestration networks, while payment platforms like BVNK create blockchain-based systems that bypass traditional banking intermediaries entirely.

Stablecoin issuers generate revenue by investing the dollars they receive into low-risk instruments like short-term U.S. Treasuries, retaining the generated interest.

This practice creates a strong macroeconomic impact as stablecoin inflows can lower three-month Treasury yields, making issuers active participants in yield curve dynamics.

The programmability aspect remains largely untapped, allowing condition-based transactions that transform static money into a dynamic financial infrastructure.

Applications of this technological development include trustless escrow, automated liquidity management for corporate treasuries, real-time payroll systems, and micropayments for IoT devices that transact based on sensor data.

FX Market Disruption Targets $7.5 Trillion Daily Volume

The report identifies foreign exchange as stablecoins’ ultimate target, with the massive $7.5 trillion daily FX market still relying on T+2 settlement, correspondent banks, and pre-funding inefficiencies.

On-chain FX allows atomic payment-versus-payment transactions that eliminate counterparty credit risk and reduce operational complexity by combining messaging and settlement into a single layer.

De Patoul explained that “for a $7.5 trillion-a-day FX market participant to migrate, banks need to adopt on-chain settlement systems so trades can clear T+0, 24/7/365.”

He noted early adoption on certain currency pairs, while predicting that all FX will eventually MOVE on-chain, forcing traditional finance to adopt these settlement norms.

The current payment system’s three pillars face disruption through stablecoin technology.

SWIFT messaging creates 2-3x longer processing times and 3-8x higher costs in emerging markets, while pre-funding locks $27 trillion in nostro and vostro accounts, costing providers 3-5% annually in lost yield.

Traditional money transfer operators achieve low capital turnover rates, with Wise at 1.26x and Remitly at 2.23x annually.

In contrast, stablecoin-powered platforms like MANSA achieve 11x monthly capital turnover. In fact, Arf achieved 56x annual turnover by cycling funds rapidly without expanding working capital.

DeFi credit protocols are becoming major working capital engines, with platforms achieving substantially higher turnover than traditional fintechs.

The report reveals that 21% of U.S. commercial deposits, worth $3.85 trillion, earn no yield, creating opportunities for yield-bearing stablecoins that have already distributed over $600 million.

Banking Industry Fights Back as Stablecoin Adoption Accelerates

Major U.S. banking associations are urging Congress to tighten GENIUS Act regulations, warning that loopholes could allow stablecoin issuers to offer yield indirectly through affiliated exchanges.

The Bank Policy Institute, joined by the American Bankers Association and other groups, cited Treasury estimates that yield-bearing stablecoins could trigger $6.6 trillion in deposit outflows from traditional banks.

The banks argue that stablecoin yield programs could heighten “deposit flight risk” during economic stress, leading to tighter credit conditions and higher borrowing costs.

However, Coinbase and PayPal continue offering stablecoin rewards despite the legislation, with CEO Brian Armstrong stating “we are not the issuer” in defense of their programs.

@Coinbase and @PayPal are pushing forward with stablecoin yield programs, despite new US legislation banning such incentives for issuers.#Coinbase #PayPalhttps://t.co/F4bTmQbl6J

The report projects stablecoins will facilitate 12% of global cross-border payment flows by 2030, representing $1 in every $8 sent across borders.

Visa has already partnered with Yellow Card Financial for stablecoin payments across 20 African countries, while Mastercard enables 3 billion cardholders to purchase crypto through chainlink integration.

Emerging markets present particular opportunities where domestic payment rails are “slow, costly, and fragmented.”

Stablecoins can enhance these systems by treating fiat like data packets, allowing faster, more transparent flows with embedded compliance that reduces operational friction and bypasses traditional correspondent banking relationships.