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President Trump’s GENIUS Act legalizes stablecoins and requires them to be backed by U.S. dollars or Treasuries. That’s going to increase demand for dollar-backed assets and, maybe, cement the dollar’s reserve currency status. Bitcoin and Ether have both risen as a result, alongside a modest recovery in the U.S. dollar.
Bitcoin is up. Ether is up. And the dollar is up—a little. These things might be related if you believe, as many in the cryptocurrency world do, that the Trump Administration’s regulatory support for crypto will revolutionize digital payments.
Bitcoin was up 1.27% this morning at just under $119K per coin. ETH rose sharply by nearly 12% over the last five days. These gains came as President Trump signed the GENIUS Act, which legalizes stablecoins. Stablecoins are cryptocurrencies that maintain their value at 1:1 with fiat currency, usually the U.S. dollar.
The GENIUS Act specifically requires that stablecoins in the U.S. be backed by dollars or U.S. Treasuries. That will lock in demand for dollars and short-term U.S. bonds from stablecoin issuers, and that in turn will support both the dollar and the price of bonds.
Lo and behold, the U.S. dollar, which had been down by 10.8% year-to-date at the beginning of the month, has picked itself up and is now down only 9.39%.
The act “formalizes stablecoin issuers’ role as quasi money market funds, supporting US short-term debt markets and channeling non-USD liquidity into dollars,” Deutsche Bank analysts Marion Laboure and Camilla Siazon told clients in a note seen by Fortune. “At a time when US dollar hegemony is under question, this has been seen as a win by the Trump administration. On Friday, Trump affirmed that the GENIUS Act would ‘secure the dollar’s status as the world reserve currency,’ and followed that if the US were to lose its reserve status, it would be akin to the US ‘losing a world war.’”
It’s not yet clear whether the crypto market is big enough to push up the price of the dollar. But it might be, Laboure and Siazon say. “Tether alone holds over ~$120bn in treasury bills as of Q1 2025 and ranks amongst the top holders of US treasuries.”
“The US treasury predicts that T-bills held by stablecoin issuers (excluding interest-bearing stablecoins) will grow to ~$1trn by 2028,”
