Source: Wall Street Journal
The US stablecoin bill stipulates that all stablecoins must be backed 1:1 by high-quality, low-risk liquid Assets, specifically including US Treasury bonds that mature within 93 days. Data shows that the Inflow of stablecoin funds can cause the 3-month US Treasury yield to decrease by 2-2.5 basis points within 10 days, while Outflow of funds raises the yield by 6-8 basis points. Continued Buy of short-term US Treasury bonds by stablecoins may suppress yield volatility, thereby weakening the Federal Reserve's ability to adjust the financial environment through short-term rates.
The GENIUS Act was passed with a large majority, allowing USD stablecoins to become a new channel for global funds flowing into the United States, driving demand for short-term US Treasuries and influencing interest rate fluctuations.
According to the Chase Trading Platform, Deutsche Bank released a research report on June 18 stating that the passage of the GENIUS Act will officially incorporate USD stablecoins into the compliance system, becoming a new channel for attracting global "non-USD funds." When global investors switch to USD stablecoins, it effectively converts local currency funds into USD assets, leading to an indirect inflow into the US market and reinforcing the global dominance of the dollar.
As the Act requires all stablecoins to be backed 100% by highly liquid, low-risk assets, particularly US Treasury securities maturing within 93 days, this will increase demand for short-term US Treasuries and affect their yield trends. Research shows that inflows of stablecoin funds can lower the 3-month US Treasury yield by 2–2.5 basis points within 10 days, while outflows can increase it by 6–8 basis points.
If stablecoins continue to Buy short-term US Treasuries, it may suppress yield fluctuations, thereby weakening the Federal Reserve's ability to adjust the financial environment through short-term rates. Furthermore, the US Treasury warns that allowing stablecoins to pay interest could siphon off a large amount of bank deposits, threatening the stability of the traditional banking system.
Consolidate the digital hegemony of the dollar.
Deutsche Bank pointed out that with the passage of the GENIUS Act, the US is expected to officially establish a regulatory framework for stablecoins. This shift may make dollar-pegged stablecoins (such as USDT and USDC) a new channel for absorbing global "non-dollar liquidity"—that is, money from around the world (which is not originally in USD) may become USD assets by purchasing USD stablecoins, thereby indirectly bringing funds into the US asset system and further consolidating the dollar's global dominance.
Currently, USD stablecoins account for over 99% of the total Market Cap of the entire stablecoin market. According to data from the Bank for International Settlements (BIS), by April 2025, the total amount of US Treasuries held by USD stablecoins exceeds 120 billion USD, with an increase of 40 billion USD in 2024 alone, surpassing the US Treasury purchases of most foreign governments.
According to the GENIUS Act, all stablecoins must be backed 1:1 by high-quality, low-risk liquid assets, specifically including U.S. Treasury bills maturing within 93 days, insured bank deposits, or physical U.S. dollars.
This means that the future expansion of the stablecoin market will simultaneously drive up the demand for short-term U.S. Treasuries. Data shows that inflows into stablecoins can reduce the yield of 3-month U.S. Treasuries by 2-2.5 basis points within 10 days, while outflows push up yields by 6-8 basis points, with Tether (USDT) having the most significant impact on yields.
If U.S. dollar stablecoins continue to expand, their "crowding out effect" on the short-term interest rate market may also become increasingly significant. Continued buying of short-term U.S. Treasuries by stablecoins could suppress yield fluctuations, thereby weakening the Federal Reserve's ability to adjust the financial environment through short-term interest rates, which may force Global monetary authorities to strengthen coordination to stabilize financial conditions.
With the rise of the stablecoin market, the U.S. Treasury has also issued warnings; allowing stablecoins to pay interest could lead a large amount of bank deposits to flow into these "more flexible" digital assets, thereby undermining the stability of the banking system.
To mitigate this risk, the GENIUS Act explicitly prohibits stablecoins from paying interest, in order to avoid direct competition with bank deposits.
Global digital dollarization is accelerating.
As the GENIUS Act progresses, regulated U.S. dollar stablecoins (such as USDC and USDT) are accelerating the global "digital dollarization" process, especially in countries and regions where local currencies are unstable and inflation is severe.
In many countries, the primary purpose for the public to use stablecoins is not for investment or trading, but for saving dollars, essentially using stablecoins to hedge against local currency depreciation and high inflation. A Visa-sponsored survey shows that in countries such as Brazil, Turkey, Nigeria, India, and Indonesia, 47% of crypto users indicated that "saving dollars" is their primary reason for using stablecoins.
Stablecoins are rapidly expanding globally. In May 2025, 58% of the stablecoin transactions on Ethereum and Solana came from outside North America, compared to just 13.7% in May 2021. The Atlantic Council predicts that over 80% of stablecoin transactions will occur outside the United States in the future.
In the field of cross-border remittances, stablecoins have quickly risen with their low cost and high efficiency advantages. According to World Bank data, the global average cost of traditional cross-border remittances is 6.62%, while the cost of remittances using stablecoins is typically only between 0.5% and 3.0%, showing a significant decline.
Editor/jayden
