The GENIUS Act sets strict reserve and licensing rules for stablecoins.
This ensures 1:1 backing, transparency, and stronger consumer protection.
The Act strengthens the U.S. dollar’s position through stablecoins.
It also counters the rise of state-controlled alternatives like the digital yuan.
Stablecoins may become major buyers of U.S. Treasuries.
The Act could unlock trillions in new demand for short-term government debt.
The GENIUS Act aims to regulate stablecoins, boost U.S. dollar dominance, and strengthen Treasury demand—reshaping global finance through crypto-backed monetary policy.
In late May 2025, the U.S. Senate passed the GENIUS Act, a landmark stablecoin bill that has sparked widespread discussion. The legislation aims to establish a comprehensive regulatory framework for stablecoins in the United States. It is expected to not only enhance the global influence of the U.S. dollar in the digital financial era but also strengthen demand for U.S. Treasury bonds.
WHAT ARE STABLECOINS?
Stablecoins are a unique category of cryptocurrency, first introduced in 2014, designed to maintain a stable value by pegging to traditional assets—most commonly fiat currencies like the U.S. dollar or the euro. Unlike volatile assets such as Bitcoin, stablecoins aim to offer price predictability while leveraging the speed, transparency, and programmability of blockchain technology.
This blend of blockchain efficiency with fiat stability has positioned stablecoins as a critical piece of the digital asset landscape. Not only are they widely used as a medium of exchange and store of value, but they’ve also become a key vehicle for accessing U.S. dollar-denominated assets globally—particularly in regions with limited dollar liquidity.
📌 3 Core Functions of Stablecoins:
Store of Value
Trading and Liquidity Tool
Payment and Settlement Rail
(Source: Chainalysis)
Since 2020, stablecoin adoption has seen exponential growth. According to a report published by Deutsche Bank in May, the market capitalization of stablecoins has surged from just $20 billion in 2020 to an impressive $246 billion in 2024. As of May 2025, the total market cap stands near $232 billion, reflecting their increasing role in both decentralized finance (DeFi) and traditional financial markets.
The growing relevance of stablecoins has also caught the attention of regulators. In May 2025, the U.S. Senate passed the GENIUS Act, a major legislative milestone aimed at building a comprehensive regulatory framework for stablecoins. This act is widely viewed as a strategic move to strengthen the U.S. dollar’s position in global digital finance and to reinforce demand for U.S. Treasuries through the integration of stablecoins into regulated financial systems.
>>> More to read: What is Stablecoin ? Stable Virtual Assets
WHAT IS THE GENIUS ACT?
The GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins Act—is a landmark stablecoin regulation bill introduced by the U.S. Senate in 2025. Commonly referred to as the “Genius Act,” the legislation aims to integrate stablecoins into the U.S. regulatory framework while safeguarding consumer interests and overall financial stability. At its core, the bill seeks to leverage stablecoins to reinforce the global dominance of the U.S. dollar in the digital era.
While governments across Europe and the U.K. are also drafting stablecoin legislation, the GENIUS Act stands out as the most influential regulation to date. According to a report by Deutsche Bank, over 83% of all stablecoins are currently pegged to the U.S. dollar, whereas the euro accounts for just 8%—underscoring America’s unique position in shaping the future of digital currency standards.
The GENIUS Act lays out 3 key regulatory pillars to guide the global standard for stablecoin governance:
✅ Reserve Transparency
Stablecoin issuers must maintain reserves fully backed by U.S. dollars, short-term Treasury bills, or other approved high-liquidity assets. These reserves must support a strict 1:1 redemption ratio to prevent depegging risks. Issuers are also required to publish regular reserve disclosures and undergo audits by independent accounting firms to ensure transparency.
✅ Clear Regulatory Licensing
Issuers must obtain approval from U.S. financial regulators and comply with stringent anti-money laundering (AML) and counter-terrorism financing (CTF) requirements. This framework brings stablecoin operations under the scope of the existing financial system, reducing the risk of unregulated “shadow banking” activities.
✅ Dollarization Standards
Even offshore stablecoins entering the U.S. market must comply with the same regulatory standards, thereby reinforcing the dollar’s dominance in the global digital economy.
This act signals a pivotal shift in how stablecoins are treated—not just as crypto assets, but as core infrastructure for the next generation of global finance. The GENIUS Act isn’t just about regulation; it’s about strategic positioning in a rapidly evolving monetary landscape.
>>> More to read: What is Trump’s Bitcoin Strategic Reserve Plan?
HOW DOES THE GENIUS ACT IMPACT THE U.S. DOLLAR AND TREASURIES?
The newly passed U.S. stablecoin legislation—the GENIUS Act—is more than just a regulatory framework for legitimizing stablecoins. At its core, it reflects a broader strategic objective: to strengthen the U.S. dollar’s role as the world’s reserve currency and boost demand for dollar-denominated assets.
📌 A Response to Global Doubts on Dollar Assets
Recent concerns over former President Donald Trump’s unpredictable tariff policies and the long-term fiscal health of the U.S. have increased global investor caution toward dollar assets. While U.S. Treasuries remain a key safe-haven asset, their “risk-free” reputation has come under growing scrutiny as yield volatility rises.
In this context, supporters of the GENIUS Act argue that stablecoins could offer a powerful tool to protect and extend the dollar’s international dominance. By anchoring digital financial infrastructure to the U.S. dollar, the Act is seen as a way to maintain trust and liquidity in dollar assets—particularly U.S. Treasuries.
📌 Official Voices and Strategic Vision
Senator Bill Hagerty, a vocal backer of the bill, told CNBC in May that dollar-pegged stablecoins could offer a decentralized alternative to China’s state-backed digital yuan. He emphasized that the GENIUS Act would “essentially enshrine the dollar’s value as a reserve currency.”
“This will effectively extend the demand for U.S. Treasuries,” Hagerty added.
He even predicted that by 2030, stablecoin issuers could become the largest holders of U.S. government debt.
📌 Reinforcing the U.S. Debt Market
A recent Deutsche Bank report notes that, since most stablecoins are backed by U.S. dollar assets, the GENIUS Act effectively formalizes stablecoin issuers as quasi-money market funds. This helps absorb short-term U.S. debt and channels global liquidity into dollar-based instruments.
For example, USDT, the world’s largest stablecoin, currently holds over $120 billion in U.S. Treasuries, ranking it as the 19th-largest holder globally.
David Sacks, a prominent crypto policy advocate, has forecast that with the Act in place, the stablecoin market could scale from $200 billion to several trillion dollars, injecting hundreds of billions in annual demand for U.S. Treasuries.
✏️ Summary
The GENIUS Act sets clear guidelines for stablecoin issuers, including the requirement to hold reserves in high-quality, dollar-denominated assets. This measure is designed to protect consumers from redemption risks during sudden or large-scale sell-offs of stablecoins.
Beyond consumer protection, the bill also presents a broader strategic opportunity: to reinforce the U.S. dollar’s dominance in global finance and increase demand for U.S. Treasury securities through the institutionalization of stablecoins.
However, the GENIUS Act has not yet been fully enacted into law, and its future trajectory remains subject to political and regulatory developments.
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〈What is “GENIUS Act”? Can Stablecoins Really Save the Dollar?〉這篇文章最早發佈於《CoinRank》。
