GENIUS Act: How Stablecoin Regulation Could Reshape U.S. Debt and Financial Power

Andrew Chen
GENIUS Act

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  • GENIUS Act could require stablecoin issuers to buy U.S. debt, shifting power from the Fed to the Treasury.
  • The Act may reshape U.S. debt markets as stablecoin issuers could become major holders of Treasuries.
  • The debate over the Act reflects a growing role for stablecoins in U.S. financial strategy and global dollarization.

A heated debate has emerged around the GENIUS Act, with author and analyst Shanaka Anslem Perera making a bold claim that the legislation does more than regulate stablecoins—it reorganizes financial power within the U.S. government. Perera argues that the Act gives the Treasury Department an automatic engine for buying U.S. debt, significantly shifting financial control away from the Federal Reserve. But is he right, or is this a misinterpretation of the law’s intentions?

The Act’s Potential Impact on U.S. Debt

Perera’s interpretation suggests that stablecoin issuers will be required to hold 100% of their reserves in short-term U.S. Treasuries or central bank cash. This could mean that every new stablecoin issued would automatically buy U.S. government debt, creating a “privatized quantitative easing” system that runs outside the Federal Reserve’s control.

Perera points to projections from the Treasury Department, which expects stablecoins to grow to a market size of $2-3.7 trillion by 2030. If this happens, stablecoin issuers could become some of the largest holders of U.S. debt. Adding to this, Perera sees Wall Street’s recent acceptance of Bitcoin and Ether as collateral by JPMorgan as a signal that financial markets are adjusting to a new power dynamic influenced by the Treasury rather than the Fed.

Critics Push Back: Stability vs. Speculation

While Perera’s theory has gained traction, critics argue that the analysis is flawed. Many point to the explicit language in the GENIUS Act, which allows U.S. coins and currency—not just Treasuries—as acceptable reserves for stablecoin issuers. This detail challenges the assertion that stablecoins will be forced to purchase government debt. Furthermore, some critics believe that the long-term goal of stablecoin regulation may not be about Treasury funding at all but could center around U.S. accumulation of assets like Bitcoin and gold, diversifying the country’s holdings outside of traditional government debt.

Also Read: Bank Lobby Urges Congress to Ban Interest-Bearing Stablecoins Under GENIUS Act

The Bigger Picture: Stablecoins and U.S. Financial Strategy

The debate over the GENIUS Act is about more than just stablecoins—it’s about the future of U.S. financial policy. Stablecoins have become an essential tool in emerging markets where people seek stability amid inflation and currency controls. If Perera’s theory holds true, the global shift toward using stablecoins could funnel more capital into U.S. debt markets, giving the Treasury more power over funding while potentially undermining the Federal Reserve’s influence on borrowing costs. This growing role of stablecoins has made them a central pillar of U.S. financial strategy, with global implications for dollarization, monetary policy, and financial stability.

Whether Perera’s claims about the GENIUS Act will prove true remains to be seen, but the conversation around stablecoin regulation is now at the forefront of U.S. economic policy. The debate may have only just begun, but its impact could reshape the financial landscape for years to come.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.

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