On Sunday Punchbowl News published the latest edits to draft stablecoin legislation, the Genius Act, which is expected to receive a Senate vote in the next two weeks. While there’s been talk of many changes, most of them were made before the successful procedural (cloture) vote on 19 May and we previously covered them here. One area worth highlighting is how some of the changes address potential conflicts of interest.
While the Trump family’s crypto activities have attracted a lot of attention, there’s another conflict lurking in the legislation. The US Treasury is responsible for the issuance of Treasury debt. Giving it significant influence over stablecoin issuers puts it in the position of power over significant investors in those Treasuries. This pattern of Treasury financing needs influencing regulatory policy has emerged elsewhere, with the administration reportedly preparing to ease bank capital requirements partly to encourage more government debt purchases. With stablecoin market cap approaching $250 billion and potentially reaching $2 trillion soon, these conflicts could have significant implications for Treasury financing.
During Congressional testimony last month, Treasury Secretary Scott Bessent said, “with stablecoin legislation, there is speculation that there may be up to $2 trillion of demand over the next few years for US government securities from digital assets.”
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