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Stablecoin Issuers Propel U.S. Treasury Demand Following Senate Passage of GENIUS Act

Major stablecoin issuers have boosted short-term Treasury holdings in a $256 billion market awaiting House approval of the GENIUS Act’s reserve disclosure regime.

Representations of cryptocurrencies are seen in front of displayed stock graph in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
An illustration picture taken in London on May 8, 2022, shows a gold plated souvenir cryptocurrency Tether (USDT) coin arranged beside a screen displaying US dollar notes.

Overview

  • The U.S. Senate passed the GENIUS Act last week to establish monthly reserve disclosures and anti-money laundering requirements for stablecoin issuers.
  • Tether holds over $120 billion in U.S. Treasuries and Circle allocates the majority of USDC reserves to short-dated government debt and repurchase agreements.
  • Stablecoins now invest about 80% of their combined $256 billion market in Treasury bills and repos, representing roughly $200 billion in government debt.
  • Analysts warn that the rapid expansion of stablecoins could outpace Treasury supply and shift U.S. debt issuance toward shorter maturities.
  • Large financial institutions are increasingly seeking stablecoin solutions, driving calls for regulatory guardrails before broader market adoption.