Stablecoin Legislation x US Treasuries: A Structural Reconstruction of Liquidity
Recently, the U.S. Senate passed the "GENIUS Act", marking the formal establishment of the U.S. stablecoin regulatory framework. At first glance, this seems to be progress in the regulation of “on-chain dollars,” but it actually buries a seed for the reconstruction of US Treasury liquidity 🌱
Core requirements of the bill: Stablecoin issuers must hold high liquidity assets as reserves on a 1:1 basis. Who qualifies as collateral?
✅ U.S. Dollar Cash
✅ U.S. Treasuries (especially short-term T-Bills)
✅ Government bonds under repurchase agreements
Are stablecoins equivalent to on-chain money market funds?
Taking USDT as an example, as of March 2025, over 70% of its reserves are in short-term U.S. Treasuries, with a scale exceeding $110 billion. Circle's USDC also holds a large amount of T-Bills through BlackRock funds.
Stablecoins are not “using U.S. Treasuries,” but are structurally becoming buyers of U.S. Treasuries.
Timing is crucial:
Starting in June 2025, the maturity and refinancing pressure of U.S. Treasuries will surge to $8 trillion in the second half of the year.
The Federal Reserve continues to "shrink its balance sheet," while foreign investments (such as from China and Japan) continue to reduce holdings.
Who will take over? Perhaps, it's the “on-chain dollars.”
The institutional regulatory path for stablecoins will guide more mainstream financial institutions to participate in issuance and custody.
You heard it right, financial institutions and entities that purchase U.S. Treasuries can also issue stablecoins.
And U.S. Treasuries, as reserve assets, will be deeply embedded in the crypto financial system.
I believe this is a grand “scheme” by the Trump administration, stepping on the left foot with the right, to alleviate the urgent pressure of maturing U.S. Treasuries.
From the perspective of the dollar:
Stablecoin regulation = Increased demand for U.S. Treasuries with a "digital umbilical cord"
→ The more on-chain dollars circulate, the steadier the off-chain U.S. Treasury buying will be.
The digital sovereignty of the dollar worldwide is being re-anchored through stablecoins.
Indirectly, it is also weakening or replacing the Federal Reserve's "monetary issuance authority"
