Senator Bill Hagerty on Stablecoins and U.S. Treasuries
In a recent discussion on CNBC, Senator Bill Hagerty (R-TN) projected that issuers of stablecoins are poised to become the foremost possessors of U.S. Treasuries globally. He emphasized that as these digital currency entities seek to maintain their dollar peg, they are likely to funnel significant investments into U.S. government securities.
“Stablecoin issuers will emerge as the largest holders of U.S. Treasuries in the world,”
Hagerty asserted during the interview.
GENIUS Act and Its Objectives
Hagerty, who has been a proponent of regulatory frameworks for cryptocurrencies, has introduced a legislative proposal known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This bill, currently undergoing congressional review, aims to lay down comprehensive regulations governing stablecoin usage.
Clarification on Stablecoin Backing
When questioned about what underpins stablecoins, Hagerty clarified,
“It’s not going to be equities. It’s going to be high-quality short-term assets, either short-term U.S. Treasuries or cash. I believe the majority will comprise U.S. Treasuries.”
He expressed optimism about the bill’s progression toward becoming law and celebrated its recent advancements by stating,
“Tonight, the Senate moved forward on the GENIUS Act. This groundbreaking, bipartisan legislation will propel America’s payment system into the 21st century. The GENIUS Act will give the United States a competitive digital payment framework with unparalleled efficiency.”
Impact on U.S. Treasuries
Hagerty added that this shift is anticipated to enhance the demand for U.S. Treasuries by over $1 trillion, all while fostering innovation in the digital asset sector within the U.S. The proposed legislation mandates stablecoin issuers to maintain a 1:1 backing of their assets, which may consist of U.S. currency, funds secured as demand deposits with insured banks, or U.S. Treasury bills, notes, and bonds. He concluded with enthusiasm about what this legislative move signifies for America’s financial future and consumer protection.
