Stablecoins are playing an increasingly important role in both crypto markets and traditional finance, according to a Friday report by Wall Street giant Citigroup.

As stablecoin usage grows, so does their demand for short-term U.S. Treasuries, although substitution from money market funds may limit the net effect, the report said.

Legislation under consideration in Congress could further entrench this trend by requiring reserves to be held in short-dated government debt, the bank noted.

Citi said the U.S. dollar’s dominance in stablecoin issuance reflects its status as the global reserve currency, rather than driving it.

Dollar-backed stablecoins like USDT remain dominant, fueled by their central role in crypto trading and blockchain-based payments, the bank said.

Meanwhile, new players like PayPal (PYPL) and Visa (V) are also experimenting with stablecoin use cases, Citi said.

The potential market is significant, $1.6–$3.7 trillion by 2030, according to Citi, but regulatory constraints such as yield restrictions may cap growth.

Still, stablecoin issuance trends could offer insights into the evolving global monetary order, the report added.

Read more: U.S. Stablecoin Bill Approval Could Trigger a Long-Term Crypto Bull Market: Bitwise

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