In a landmark decision, the US Senate passed the GENIUS Act on June 17 with a 68-30 bipartisan vote, establishing the first comprehensive regulatory framework for stablecoins. The legislation now moves to the House where it must be reconciled with the competing STABLE Act.

Key Provisions and Immediate Reactions

The bill mandates 1:1 reserve backing for stablecoins using US dollars or short-term Treasury securities, while implementing strict AML measures. Senator Bill Hagerty (R-TN), who introduced the bill six weeks prior, hailed it as strengthening dollar dominance and Treasury demand. However, legal and economic experts warn the legislation could destabilize financial markets.

——"This effectively deputizes stablecoin issuers as wholesale buyers of US debt," noted crypto attorney Aaron Brogan. "New token revenue gets funneled directly into Treasury bills."——

The Hidden Risk in Treasury Markets

A Vanderbilt University study reveals alarming systemic vulnerabilities:

• Current stablecoin circulation ($230B) represents 25% of secondary Treasury market volume
• Treasury market liquidity has declined 40% since 2020 due to regulatory changes
• Outstanding Treasury debt ballooned from $4.8T (2008) to $28.6T (2025)

The research highlights March 2020 and April 2025 liquidity crises as precedent, when Treasury markets froze during COVID-19 panic and Trump tariff announcements respectively. 【Circle's $2B USDC redemption during the SVB collapse】 further demonstrates the real-world risks.

Policy Domino Effects

Experts identify three critical concerns:

1. Debt composition shift: Stablecoin preference for short-term Treasurys may force the government to alter its funding strategy
2. Crowding out effect: Other borrowers could face reduced access to Treasury securities
3. Contagion risk: A major stablecoin redemption event might trigger Treasury market failure

Notably, regulators appear aware of these risks. The Federal Reserve recently proposed easing capital rules for bank Treasury trading, though the effectiveness remains uncertain.

Political Roadblocks Ahead

Before implementation, the bill faces House scrutiny and potential opposition from:

• Senator Elizabeth Warren, who condemned it as "Trump's crypto corruption bill"
• Congresswoman Maxine Waters, ranking Democrat on Financial Services
• Progressive Democrats wary of Trump's growing crypto ties

The legislation's fate may hinge on whether House members prioritize the growing $94B stablecoin payment industry over political concerns. As the debate shifts to reconciling GENIUS with the STABLE Act, all eyes turn to Washington's next move in this high-stakes financial regulation battle.