The U.S. stablecoin market, which commands 96% of the global share valued at $247 billion, is on the brink of significant regulatory changes. These adjustments could see the market expand to over $2 trillion by 2028, a prediction made by Treasury Secretary Scott Bessent during a recent Senate hearing advocating for stricter regulations in the sector.
GENIUS Act Gains Momentum in the Senate
This week, the GENIUS Act achieved a crucial milestone by passing a cloture vote in the U.S. Senate, indicating broad political support for federal oversight of stablecoins. The legislation aims to solidify the framework for stablecoins by requiring full backing in U.S. dollars or similar liquid assets.
Among its stipulations, the act mandates annual audits for issuers with market capitalizations exceeding $50 billion. Furthermore, it includes specific provisions for monitoring the activities of foreign-issued stablecoins within the United States, highlighting concerns regarding monetary sovereignty and potential systemic risks.
Currently, the U.S. stablecoin market, valued at approximately $247 billion, constitutes more than 96% of the global total. Reports indicate that former President Donald Trump has endorsed the bill, advocating for its passage before the summer recess. This aligns with the administration’s broader objective of maintaining the dollar’s status as the dominant reserve currency amidst increasing geopolitical competition and emerging alternatives.
Treasury Envisions Long-Term Impact on Dollar Utilization
Bessent emphasized that stablecoins represent a “new mechanism” for bolstering the international standing of the U.S. dollar, particularly in cross-border trade and decentralized finance (DeFi). He remarked that the forecast of $2 trillion is “very reasonable,” contingent on regulatory measures facilitating institutional adoption and widespread trust.
This statement follows ongoing warnings from economists regarding the challenges facing dollar supremacy, particularly from central bank digital currencies (CBDCs) backed by China and other tokenized alternatives. Despite these challenges, Bessent noted that the dollar has historically maintained its reserve status by adapting to new financial architectures—a trend he expects to continue with the integration of regulated stablecoins.
He underscored that “U.S. Treasury-backed stablecoins will serve as the next pillar of the dollar’s strength,” urging lawmakers to act swiftly to ensure that the U.S. takes a leading role in shaping this emerging market.
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