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Genius Act Stabecoin Bill raises concerns at risk

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The US crypto industry celebrates as the Genius Act, a framework for Stablecoin regulation, was passed to the US Senate on June 17.

The bill passed 68-30 in a Bipartisan effort, nearly six weeks after the Tennessee Senator Bill Hagerty introduced it to the Senate. It will now go to the House of Representative, where Congress should return it with its own stable home movement, which aims to repair stablecoins as well.

The law holds a number of provisions, from the rules for the providers, anti-pearl laundering measures and mandatory 1: 1 supporting stablecoins with reserves such as the US dollars and short-term security security.

Lawmakers said the bill would offer clarity and stability, but economic and legal observers noted that supporting the clause of the Genius Act could bring a systematic risk to the US financial system.

Senators claim a genius that boosts Treasury’s demand

Hagerty said, “This bill is a cement of US dollar dominance, it will protect customers, it will bring demand for us wealth.”

The preference of the Genius Act for the US Treasurys as a backbone asset remembers some observers. Professor Yesha Yadav at Vanderbilt University and Brendan Malone, who had previously worked on payments and clusters on the Federal Reserve Board, released a paper on June 10 detailing their position.

The bill, according to a crypto -focused attorney Aaron Brogan, “Deputizes Stablecoin Issuers as who wholesale US debt buyers.

Those who have set up stablecoins are reminded that the current state of the US Treasury market is not measured. Yadav and Malone said the Circle had a switch -switching supply of $ 60 billion, while around $ 900 billion was exchanged in the second ark markets.

This means that at present, if someone who gives like a circle is to liquid its properties, it is likely that there is sufficient counterpart where it can sell its treasurys.

However, it is subject to change if the Stablecoin market continues to grow, noted by those who have set it up:

“Stablecoins has experienced growth growth in the last five years, with expanding release from around $ 2B in 2019 to $ 230B to the remaining claims in the first quarter of 2025.”

Moreover, the Treasury market has been running for liquidity problems in recent years, which has been the result of many factors:

High-speed, automated securities dealers provide stiffer competition to major lenders.
Post-2008 regulations require banks to have “deeper rain-day capital buffers.”
.
The remaining tradable treasury debt (represented by a Treasury Security) grew from $ 4.8 trillion in August 2008 to $ 28.6 trillion in March 2025.

These combined factors mean that there are fewer counterparts available to buy the type of large movements of a person’s debt will expect if a stablecoin firm will experience dissatisfaction and there is a running for redemption on its tokens.

Those who set it have noted that the disagreement of Treasury markets or the possibility of a stablecoin issuer is hypothetical. Circle saw $ 2 billion in USDC (USDC) Removed from circulation in the days following the collapse of its banking partner, the Silicon Valley Bank.

Treasury markets saw a Liquidity Crunch in March 2020, during the CoVID-19 market disturbance, where investors could not find counterparts to exchange their wealth, “causing prices to be deeply chaotic.”

This happened again in April 2025 when US radical changes made US Donald Trump’s US trade policies with new tariffs: “Treasury trading has experienced serious motion and unusual price movement. Investors cannot trade properly, relentlessly motivating concerns about the causes of the latest damage.”

So, what do everyone mean?

The state of Yadav and Malone are increasingly offensive Treasury markets and the fast -growing Stablecoin ecosystem both create risks for each other.

In the event of a large stablecoin provider who experiences running on Stablecoins, it does not make sense to the Treasury markets and a lack of counterparts can prevent the seller who seller its security, and will be pointless.

It can also affect the credibility of Treasury markets. “The growth of the Stablecoin industry appears to be taking place without a major consideration of the Treasury market capacity to maintain this growth in practical terms,” states of the set.

Increasing demand from the Stablecoin sector may also be brought by other borrowers who want to include treasurys in their portfolios.

It can also change the US financial policy and the discretion of how the government funds itself. Short -term obligations form around a quarter of total debt in Treasury. Preference for 10- and 30-year bonds “means that policy manufacturers can usually plan a variety of initiatives that require spending decades.”

Under the Genius Act, Stablecoin Issurs should better return their properties with short-term treasurys. If the current treasury debt composition changes in favor of the short period of time:

“The purposes of regulation for stablecoins can develop how the United States government funds itself and the costs that have to be paid to do so.”

Yadav and Malone ended with three policy implications:

Coordination of regulation between Stablecoin policy manufacturers and the administrators of the ark markets
Ensure that market -making skills in the second treasury market may manage the increasing demand from the stablecoin providers
Maintain the country’s credentials.

The growing coherence between Treasurys and Stablecoins “suggests a policy required to ensure that each other’s benefits strengthen the others, rather than their fragility that disturbs the whole.”

In their credit, regulators appear to be doing changes To limit these risks, but remains unclear how effective it will be.

Support for Stablecoin Bill in the US House of Representative

Before the Genius Act could potentially impose systematic risks to the American financial system, it must first pass the House of Representative.

The Bipartisan Hurdle for Crypto may end the vote in the Senate. Last year, the House of Representative voted and passed a Crypto Bill, sent to a democratic Senate, where it failed to do so on the docket.

If members were as amenable as pro-crypto law as they were last year, the remaining issue is to reconcile the bill with the transparency and responsibility of the House for a Better Economy Economy (Stable) Act.

Each report from the blockchain intelligence firm TRM Labs, “The two bills differ in structure and scope, both reflect a growing understanding of bipartisan stablecoins.”

The main issues for the discussion include “federal administration structure, coordination with state regulators, and the treatment of the regulation of algorithmic stablecoins.”

Political concerns, especially the level at which Trump can earn from the bill. Senator Elizabeth Warren Says“This is a bill written by the industry that will provide the profitability of Donald Trump’s corruption, as it drops consumer protection and weakens our national defense.”

The ranking of the Democratic Congressman on the US House on Financial Services committee Maxine Waters has become a voice critic of Trump’s activities in the crypto world. Water and other opponents with high -ranking industry can be Hold on The bill.

Democrats on the fence can also be replaced by Trump’s increasing involvement in the industry – which many in the crypto space are seen as deligitimizing – and the presidential approved ratings.

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