In July 2025, the landmark GENIUS Act formally integrated the growing stablecoin market into the fabric of U.S. financial regulation, creating a significant and automatic new channel of demand for government debt. This legislation mandates that every U.S. dollar-pegged stablecoin must be fully backed by high-quality, liquid assets, specifically U.S. dollars and short-term U.S. Treasury bills. In practice, this means that for every new digital dollar created, a stablecoin issuer must purchase an equivalent dollar’s worth of T-Bills, transforming these crypto firms into structural buyers of U.S. short-term debt.
The New Architecture of Debt Demand
The scale of this mandated purchasing is already substantial. In the 120 days following the Act’s passage, stablecoin issuers bought approximately $44 billion in U.S. Treasury bills to back their growing currencies. This surge contributed to a total where stablecoin issuers now hold an estimated $166 billion in Treasury securities, with Tether (USDT) alone accounting for about $135 billion of that sum, making it one of the largest global holders of American debt.
This dynamic is poised to grow exponentially. Treasury Secretary Scott Bessent has projected the stablecoin market could reach $3 trillion by 2030. Federal Reserve Governor Stephen Miran has echoed this, noting internal Fed projections range between $1 trillion and $3 trillion by the end of the decade. If these forecasts hold, stablecoins are set to become a permanent and powerful force in the Treasury market. Analysis from the Bank for International Settlements suggests that the influx of capital from stablecoins can already reduce government borrowing costs, with projections indicating potential annual savings of $114 billion for the U.S. government at peak market size.
A Double-Edged Sword of Stability and Risk
While this creates a beneficial new source of demand for U.S. debt, it also introduces new complexities and risks to the financial system. The very assets that ensure the stablecoin’s peg—Treasury bills—are subject to interest rate risk. If rates rise, the value of existing T-Bill holdings falls. In a scenario where many users seek to redeem their stablecoins simultaneously, issuers might be forced to sell these T-Bills before maturity, potentially realizing losses and triggering a modern, digital-speed bank run.
Furthermore, the GENIUS Act does not provide stablecoin holders with deposit insurance, placing the risk of a failed issuer entirely on the users. This combination of a potential run on stablecoins and their now-significant position in the T-Bill market means that stress in the crypto sector could rapidly transmit to the traditional Treasury market, affecting yields and liquidity for all participants. Regulators are now tasked with implementing robust capital and liquidity rules for issuers to mitigate these financial stability risks as the market expands.
The passage of the GENIUS Act has fundamentally linked the future of digital currency with U.S. debt management. As stablecoins evolve from a niche financial tool into a multi-trillion dollar component of the monetary landscape, their role as automatic buyers of T-Bills will undoubtedly shape the cost of government borrowing and present central bankers with a new, complex variable in monetary policy for years to come.
