The U.S. Treasury is no longer waiting on crypto. With the signing of the GENIUS Act into law, Washington has officially turned stablecoins from a regulatory headache into a fiscal policy tool—one designed to extend dollar dominance and potentially lower the cost of government borrowing.
Treasury Secretary Scott Bessent isn’t shy about the pivot. “We are going to keep the U.S. the dominant reserve currency in the world, and we will use stablecoins to do that,” he said earlier this month.
And just like that, stablecoins—once eyed with suspicion by regulators—are now expected to become one of the largest buyers of U.S. Treasury bills.
A Law Born from Crisis—and Realpolitik
Signed by President Trump on July 18, 2025, the GENIUS Act (Global Enhancement of National Innovation in U.S. Stablecoins) marks the first federal framework specifically designed for dollar-based stablecoins. It arrives three years after the collapse of TerraUSD—a disaster that erased tens of billions in value and kicked off a global regulatory crackdown.
Today’s policy is less about averting catastrophe and more about seizing economic leverage. Under Bessent’s leadership, the Treasury rebranded stablecoins as a mechanism to channel institutional capital into U.S. debt markets.
The law, passed with rare bipartisan support, requires stablecoins to be:
- Fully backed by liquid U.S. assets, primarily dollars and Treasury bills with maturities under 93 days
- Issued by licensed entities subject to transparency, risk audits, and consumer protections
- Monitored directly by Treasury to assess systemic risk and market concentration
On February 4, David Sacks, the White House’s crypto czar, emphasized the administration’s urgency around stablecoin legislation.
“They are very committed to moving legislation through the House and the Senate this year in order to provide that clear regulatory framework that the digital assets ecosystem needs to sustain innovation in the United States,” Sacks said in an interview on CNBC’s Closing Bell Over Time.
At a press event earlier that day on Capitol Hill, he added: “I look forward to working with each of you in creating a golden age in digital assets.”
The Numbers Behind the Pivot
As of July 29, 2025, the stablecoin market cap sits at $265.96 billion, up 5% from last month and 22% higher than where it started the year. USDT (Tether) maintains a 61.82% market share, followed by USDC and a mix of emerging tokens like PYUSD and GHO.
Some other metrics worth noting:
- 24-hour trading volume (USDT): $101 billion
- Crypto-backed stablecoins (e.g., DAI, crvUSD): $19 billion market cap
- Stablecoins currently in market: 213, though only a handful surpass the $1 billion threshold
- USDC now operates on 23 blockchains, including Ethereum, Solana, and Polygon
- Global stablecoin transaction volume in 2024: $27 trillion
Analysts say regulatory clarity is driving new inflows, especially from hedge funds and corporate treasuries seeking faster settlements and access to yield-bearing T-bills.
“However big you think stablecoin AUM will get, you’re probably thinking too small,” said Matt Hougan, CIO at Bitwise.
A New Buyer of American Debt—With New Risks
At the heart of this pivot is debt. The U.S. is counting on stablecoins to create structural demand for Treasuries, which in turn could help offset mounting federal deficits and reduce borrowing costs.
“A thriving stablecoin ecosystem will drive demand from the private sector for U.S. Treasuries,” Bessent said. “This newfound demand could lower government borrowing costs and help rein in the national debt.”
But not everyone is comfortable with that vision.
“If I choose stablecoins [for funding], I simultaneously create demand for the Treasuries I need to offload,” said Emma Muhleman, a portfolio manager at a macro hedge fund. “Not a bad deal—but it creates strange dependencies.”
Skeptics have dubbed the policy “Shadow QE 2.0”—a workaround that pumps liquidity into debt markets without overt Federal Reserve intervention. Others worry about market concentration if too much demand is funneled through just a few stablecoin issuers.
The Economist posed it plainly: “Stablecoins might cut America’s debt payments. But at what cost?”
What Comes Next
With the GENIUS Act now law, all eyes turn to implementation. The companion STABLE Act—which includes additional provisions on licensing regimes and reserve transparency—is expected to move through markup in the House by August.
Privately, Treasury officials are already mapping out potential infrastructure for on-chain Treasury markets, including partnerships with tokenization platforms and banks.
Meanwhile, stablecoin firms like Circle, Paxos, and PayPal are moving to expand operations and align with the new framework. Institutional product design is expected to shift as well, as funds explore new vehicles that blend on-chain liquidity with traditional fixed-income exposure.
If successful, stablecoins won’t just power the crypto economy. They’ll become a core instrument in the U.S. debt machine.
ChainStreet’s Take
Stablecoins are no longer fringe. They’re federally recognized, dollar-backed, and strategically deployed. This isn’t just regulatory clarity—it’s fiscal engineering. And it puts crypto’s most misunderstood asset class right at the center of American financial policy.
