Treasury Secretary Scott Bessent made a significant statement on June 17 regarding the potential impact of stablecoins on federal borrowing costs and debt growth. He highlighted the importance of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which, if passed by Congress and signed into law by the president, could have wide-reaching implications.
Bessent referenced research indicating a projected $3.7 trillion stablecoin market by 2030 and emphasized that the GENIUS Act would play a crucial role in accelerating this growth. The bill aims to establish clear rules and regulations around reserves, audits, and licensing for stablecoin issuers.
According to Bessent, the implementation of the GENIUS Act would result in a “win-win-win” scenario for issuers, the Treasury, and consumers. By requiring payment coin reserves to be primarily held in short-dated US Treasuries, the demand for these securities would increase, ultimately easing financing pressure and benefiting all parties involved.
The Senate is set to vote on the GENIUS Act today, with the session scheduled to begin at 4:30 PM Eastern Time. The bill has already received significant support, with a 68-30 vote in favor of invoking cloture on June 11, signaling the end of debate and paving the way for a final roll call.
If passed, the GENIUS Act would mandate that every payment stablecoin maintain high-quality, highly liquid assets equal to the tokens in circulation, such as Treasury bills or insured deposits. Issuers would be prohibited from offering yield on these assets, and strict regulatory measures, including Bank Secrecy Act programs and customer due diligence checks, would be enforced.
The legislation also outlines requirements for entities based on their liabilities, with larger issuers needing a federal charter and smaller ones operating under state regimes that meet federal standards. The Treasury would be responsible for publishing quarterly reserve audit templates, and the Commodity Futures Trading Commission would have limited enforcement authority in the spot market.
Supporters of the bill believe that an amendment proposed by Minority Whip Bill Hagerty could expedite the legislative process, allowing for swift enactment without the need for a conference committee. Bessent highlighted the potential impact of the GENIUS Act on increasing demand for Treasury bills and introducing millions of users worldwide to digital-asset rails settled in US currency.
The Senate’s decision on the GENIUS Act will have far-reaching implications for the future of stablecoins and their impact on federal borrowing costs and debt growth. It remains to be seen whether the projected fiscal and market effects will come to fruition based on the outcome of today’s vote.