The GENIUS Act could be the new driver of demand for U.S. Treasury bonds.

According to experts, the GENIUS Act could transform stablecoins into key tools for the Treasury bond market, creating unprecedented structural demand and redefining the role of the dollar in the crypto ecosystem.

A revolution is brewing at the heart of the US financial system with the infamous GENIUS Act. This regulatory initiative is not just another proposal for the legal framework for stablecoins in the country, but a structural change that could redefine how these stable digital currencies interact with traditional markets. 

The GENIUS Act, passed in the Senate with a unprecedented bipartisan support, seeks to create a clear and robust framework for stablecoins, facilitating their mass adoption and, most importantly, linking them directly to demand for U.S. Treasury bonds.

According to experts, regulating and promoting the use of Treasury-backed stablecoins creates a virtuous cycle: greater trust in digital currencies, greater demand for sovereign debt, and, consequently, a strengthening of the national financial market. Therefore, this is a revolutionary movement that will not only drive technological innovation but also bring economic stability—a balance the United States needs to remain competitive in the new digital age.

Experts also believe that the impact of this law could be significant and will not remain within the country's borders. By establishing a robust regulatory standard, the GENIUS Act could position the United States as a global leader in digital finance, attracting investment and paving the way for other markets to follow. Consequently, this law promises to spark a more dynamic and secure financial future.

Regulation of stablecoins under the GENIUS Act and the Treasury bond market

The federal government, along with financial sector experts, see this law as a unique opportunity to strengthen the government's financing mechanisms. 

Scott Bessent, Secretary of the Treasury, has indicated that With the GENIUS Act, demand for Treasury bonds will grow significantly, as these instruments become key support for stablecoins. This will not only increase the flow of private-sector capital into T-bills, but will also pave the way for the government to reduce its borrowing costs and better control the national debt.

The stablecoins that will be regulated under the GENUIS Act are digital currencies whose value is pegged to the US dollar. These digital currencies have been gaining ground, and it is estimated that their market could reach between $2 and $3,7 trillion by 2030. Experts predict exponential growth, positioning this market as a stable and significant source that can sustain demand for these long-term government bonds.

But what exactly is the GENIUS Act and why is it a turning point? This law seeks to establish a clear regulatory framework for the issuance and operation of stablecoins in the United States, eliminating the "gray area" that hindered the full institutional adoption of these digital assets. 

The regulation it offers GENIUS promises certainty to issuers and consumers alike, by requiring stablecoins to be backed by US assets, primarily Treasury bonds.

This regulation will not only boost confidence in the dollar-pegged digital currency, but will also strengthen the dollar's position globally, fostering its monetary hegemony and positioning the United States as the undisputed leader in digital financial innovation. Thanks to the GENIUS Act, stablecoins can transform from a limited phenomenon into a solid component of the traditional financial system.

Financial transformation and global dollarization

The scope of the GENIUS Act goes beyond regulation. By establishing clear rules and mandating Treasury asset backing, it creates a powerful alliance between digital currencies and the traditional financial market, which will not only stabilize the crypto ecosystem but also open the door for the government to raise private capital more efficiently and at lower costs.

Furthermore, global dollarization, driven by this regulation, will also benefit countries that adopt dollar-backed stablecoins for their transactions, increasing the use of the dollar in international economies. In this way, the United States will consolidate its financial influence and leadership in the digital age.

The GENIUS Act also represents the convergence of technological innovation and financial prudence. By eliminating regulatory uncertainty and ensuring a solid backstop, GENIUS will foster confidence among both issuers and users, accelerating stablecoin adoption, strengthening the Treasury bond market, and creating a virtuous cycle where technology and financial stability mutually reinforce each other.

In conclusion, the GENIUS Act, now on track for passage, opens a new chapter for the digital economy, paving the way toward a more robust, efficient financial system with enormous growth potential.

The coming years will be crucial to understanding how this law will drive a new era, with stablecoins and Treasury bonds walking hand in hand toward a more robust and connected future.

Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.