tl;dr
Treasury Secretary Scott Bessent stated that stablecoins could reduce federal borrowing costs and slow debt growth if Congress passes the GENIUS Act, which sets reserve, audit, and licensing rules for stablecoins. The bill requires stablecoin issuers to hold high-quality liquid assets equal to token...
Treasury Secretary Scott Bessent advocates that the GENIUS Act will enable stablecoins to reduce federal borrowing costs and curb debt growth by mandating reserves in short-term US Treasuries. This legislation could potentially expand the stablecoin market to $3.7 trillion by 2030. The Act sets rules for reserves, audits, and licensing for stablecoin issuers, requiring them to hold high-quality liquid assets equal to the tokens in circulation, mainly Treasury bills or insured deposits.
The bill prohibits stablecoin issuers from offering yield and mandates strict customer due diligence and reporting. Large issuers with over $10 billion in liabilities would require a federal charter, while smaller issuers could operate under state regimes that comply with federal standards. The Act also directs the Treasury to publish quarterly reserve audit templates and grants the Commodity Futures Trading Commission limited enforcement authority over the spot market.
Bessent describes the bill’s provisions as a “win-win-win” for issuers, the Treasury, and consumers. By placing payment coin reserves in short-dated US Treasuries, the legislation aims to increase demand for these securities, which could ease national debt financing pressures. The Senate has voted to proceed to a final vote on the GENIUS Act, with the outcome expected to influence both the stablecoin market’s growth and the dynamics of federal borrowing costs.
If the bill passes the House and becomes law, it is anticipated to accelerate the expansion of digital payment coins, driving millions of users worldwide onto digital-asset rails settled in US dollars. Treasury Secretary Bessent highlights that this new buyer base for Treasury bills may help rein in the national debt, signaling significant fiscal and market impacts should the Senate approve the legislation.