Does Genius Turn Stablecoin Issuers Into Stealth Buyers Of Us Debt?
The GENIUS Act promises safer, fully reserved dollar stablecoins and faster payments, but by steering issuers toward T-bills and cash, it may also hardwire a new demand engine for US debt.
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, signed into law on July 18, is billed as the statute that finally drags dollar‑pegged tokens out of the regulatory gray zone into a supervised, payments‑first framework.
Supporters say it offers legal clarity, consumer protections and a path for programmable money. Critics say it raises a deeper question:
If issuers are tightly steered into holding cash and short‑term Treasurys, does that make them structural buyers of US debt? That’s the case laid out by author and ideologist Shanaka Anslem Perera, who writes that under GENIUS, “Every digital dollar minted becomes a legislated purchase of US sovereign debt.”
The GENIUS Act defines “payment stablecoins” as fiat‑referenced tokens used mainly for payments and settlement. Only permitted payment stablecoin issuers can serve US users at scale, and these issuers must back their tokens at a 1:1 ratio with a narrow pool of high-quality assets.
These assets include US coins and currency, Federal Reserve balances, insured bank deposits, short‑maturity Treasurys, qualifying government money market funds and tightly constrained overnight repos backed by Treasurys, all held in segregated accounts.
Issuers have to redeem at par, publish regular reserve disclosures, and provide audited financials above size thresholds, while sticking to a limited set of activities linked to issuing and redeeming stablecoins rather than broader lending or trading.
Foreign issuers seeking access to US customers via domestic platforms must either comply with this framework or demonstrate to the Treasury that their home country’s regime is “comparable.”
Related: How the new US crypto bill could finally define commodities and securities
Yet GENIUS may be more of a warm-up than ready for the opening act. Analysts at Brookings recently discussed some potential issues for regulators as they implement the act.
Source: CoinTelegraph
