GENIUS Act Advances in Senate, Potentially Reshaping Stablecoin Reserves and Treasury Markets

The GENIUS Act has cleared a critical Senate vote, setting the stage for transformative changes in digital currency regulation. Stablecoin issuers WOULD be required to maintain 1:1 reserves in cash or short-term U.S. Treasuries—a move Senator Bill Hagerty claims will bolster the dollar’s reserve currency status while deepening Treasury market liquidity.

Citibank projects stablecoin issuers could absorb $1.2 trillion in Treasury holdings by 2030 under the new framework. This seismic shift comes with warnings: analysts flag potential liquidity strains and dangerous concentration risks in the Treasury market as stablecoins scale.

The legislation reflects Washington’s growing recognition of crypto’s systemic importance. By tethering stablecoins to Treasuries, policymakers aim to merge digital asset innovation with traditional monetary policy levers—a dual mandate that could redefine both sectors.