The post GENIUS Act Stabecoin Bill Raises Risk Concerns appeared on BitcoinEthereumNews.com.

The US crypto industry is celebrating as the GENIUS Act, a framework for stablecoin regulation, was passed in the US Senate on June 17. The bill passed 68-30 in a bipartisan effort, roughly six weeks after Tennessee Senator Bill Hagerty introduced it to the Senate. It will now head to the House of Representatives, where Congress must reconcile it with the House’s own STABLE Act, which also seeks to regulate stablecoins. The act holds a number of provisions, from rules for issuers, Anti-Money Laundering measures and mandatory 1:1 backing of stablecoins with reserves like US dollars and short-term Treasury securities. Lawmakers say the bill will offer clarity and stability, but economic and legal observers have noted that the backing clause of the GENIUS Act could pose a systemic risk to the US monetary system. Senators claim GENIUS bill strengthens Treasury demand Hagerty said, “This bill will cement U.S. dollar dominance, it will protect customers, it will drive demand for U.S. treasuries.” The GENIUS Act’s preference for US Treasurys as a backing asset has concerned some observers. Professor Yesha Yadav at Vanderbilt University and Brendan Malone, who formerly worked in payments and clearing at the Federal Reserve Board, released a paper on June 10 detailing their position. The bill, according to crypto-focused lawyer Aaron Brogan, “deputizes stablecoin issuers as wholesale buyers of U.S. debt. The 1-1 collateral rule funnels new token revenue into Treasury bills.”  The authors are concerned that backing stablecoins is not scalable with the current state of the US Treasury market. Yadav and Malone say that Circle has a circulating supply of $60 billion, while around $900 billion is traded in secondary Treasury markets. This means that currently, if an issuer like Circle were to liquidate its assets, there will likely be sufficient counterparties to which it could…

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Filed under: News - @ June 19, 2025 3:28 am