The U.S. cryptocurrency industry was celebrated in the Genius Act, passed in the U.S. Senate on June 17.
The bill passed 68-30 with a bipartisan effort, about six weeks after Tennessee Sen. Bill Hagerty introduced it to the Senate. Now it will go to the House, which Congress must reconcile with the House’s own stable behavior, and the bill also seeks to regulate stability.
The bill provides for many provisions, from issuer rules, anti-money laundering measures and mandatory 1:1 support for stable stability measures and provides reserves such as US dollar and short-term fiscal securities.
Legislators say the bill will provide clarity and stability, but economic and legal observers point out that the support provisions of the Genius Act could pose a systemic risk to the U.S. monetary system.
Senators claim genius bill boosts Treasury demand
“The bill will consolidate the dominance of the dollar, it will protect customers, and it will drive demand for U.S. Treasury,” Hagerty said.
The Genius Act favors U.S. Treasury bonds as a backed asset, which involves some observers. Professor Yesha Yadav of Vanderbilt University and Brendan Malone, who previously worked on the payment and clearing committee, published a paper on June 10 detailing their position.
According to cryptocurrency-centric attorney Aaron Brogan, the bill “represents stable issuers as wholesale buyers of U.S. debt. 1-1 mortgage rules Funners Funners brings new token revenues into the Treasury bill.”
The authors worry that under the current state of the U.S. fiscal market, the stability that supports stability cannot be expanded. Yadav and Malone said the circle’s circular supply is $60 billion, while there are about $900 billion in the secondary treasury market.
This means that, at present, if an issuer like Circle wants to liquidate its assets, there may be enough counterparty to sell its Treasury.
However, this may change if the Stablecoin market continues to grow, the authors point out that:
“Stablecoins has experienced growth in growth over the past five years, with the issuance rate increasing from around $2B in 2019 to about $230B by the first quarter of 2025.”
In addition, in recent years, the fiscal market has encountered liquidity problems, which are several factors:
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High-speed automatic securities dealers are offering harder competition to major lenders.
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Post-2008 regulations require banks to have a “deeper rainy day capital buffer.”
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(1) and (2) Shared banks are involved in the treasury market “face to avoiding strong incentives”.
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The outstanding tradeable fiscal debt (representative of the Ministry of Finance guaranteed) has grown from $4.8 trillion in August 2008 to $28.6 trillion in March 2025.
The sum of these factors means that if a stable company experiences bankruptcy and when redeeming its tokens, people expect to buy fewer counterparties of the type of large-scale debt movement.
Related: Genius Act can make Stablecoins “part of U.S. financial infrastructure”
The author points out that insufficient liquidity in the treasury market is not a possibility of stabilizing issuers. Circle sees $2 billion in USDC (USDC) evacuated from circulation in the days after its banking partner Silicon Valley Bank collapsed.
The fiscal market saw liquidity tightening amid the chaos of Covid-19 markets in March 2020, and investors could not find counterparties to trade their Treasury Department, “causing deep distortions of prices.”
This happened again in April 2025, when President Donald Trump made a radical shift in U.S. trade policy: “The trading treasury has experienced severe liquidity and abnormal price movements. Investors’ inability to trade smoothly always raise concerns about the cause of this latest collapse.”
So, what does this mean?
Yadav and Malone pointed out that the increasing number of liquid treasury markets and the rapidly growing Stablecoin ecosystem are posing risks to each other.
If large stable issuers experience campaigns in stable stocks, insufficient liquidity and lack of counterparty in the treasury market may prevent issuers from being able to sell their securities, and it will become powerless.
This may also affect the credibility of the treasury market. “Stable industry growth appears to be happening without paying attention to the ability of practical growth in the Treasury market,” the author noted.
Related: Stablecoin payments powered by B2B transfers reach $94B
The rising demand in the Stablecoin industry may also squeeze out other borrowers who want to join the Treasury in their portfolio.
It can also change U.S. financial policies and determine how the government can fund itself. Short-term obligations account for about one-quarter of the total treasury debt. Favoring 10- and 30-year bonds “meaning policy makers can often plan a variety of plans that require decades of spending.”
Under the Genius Act, stable issuers are best able to use the short-term finance ministry to support their assets. If the current fiscal debt constitutes a transfer of short-term preference:
“The regulatory objectives of stablecoins can well shape how the U.S. government fund itself and the costs it has to pay.”
Yadav and Malone concluded with three policy implications:
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Regulatory coordination between stable policy makers and supervisors of fiscal markets
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Ensure that marketing practices in secondary treasury markets can manage increased demand for Stablecoin issuers
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Maintain the credibility of the country.
The growing interconnection between Treasury bonds and stablecoins “represents that it is necessary to ensure that the strengths of each policy amplify each other’s strengths rather than undermining the overall vulnerability.”
To its credit, regulators seem to be making Change Limit these risks, but its effect is not yet known.
Stablecoin bill that supports the U.S. House of Representatives
Before the Genius Act could exert systemic risks on the U.S. financial system, it must first pass the House.
The Senate vote is likely to be over, and the two-party hurdles are likely to be over. Last year, the House voted and passed an crypto bill that was sent to the Democratic Senate, where it failed to do that on the case file.
If members are the same as last year’s legislation on pro-Cretto, the remaining issue is to coordinate the bill with the House’s stable transparency and accountability to achieve a better ledger economy (stability) bill.
According to a report by blockchain intelligence firm TRM Lab, “The two bills differ in structure and scope, reflecting bipartisan understanding, which is stable.”
Key issues discussed include “the structure of federal oversight, coordination with state regulators, and algorithmically stable regulatory handling.”
The political issue, the extent to which Trump can profit from the bill, remains ongoing. Senator Elizabeth Warren explain“This is a bill enacted by the industry that will enhance Donald Trump’s profitability in crypto corruption while eroding consumer protection and undermining our defense.”
On the Maxine Waters Committee of the U.S. Financial Services Commission, Democratic lawmakers have been critics of Trump’s activities in the cryptocurrency world. Waters and other advanced opponents may hold up bill.
Trump’s growing participation in the industry – many people in the crypto space think it’s paranoia, and the president’s tank approval rating may also affect Democrats on the fence.
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