When President Donald Trump signed the GENIUS Act into law this past July, it marked a significant moment in the US legislative landscape, often heralded as the first comprehensive crypto bill aimed at fostering the growth and adoption of digital assets.
However, a recent analysis raises questions about the true purpose of this legislation, suggesting that it may be more about managing government debt than regulating crypto.
Crypto As New Mechanism For Government Debt Demand?
Market expert and crypto author Shanaka Anslem recently took to social media platform X (formerly Twitter) to share his insights, asserting that while many believed the GENIUS Act was primarily focused on regulating cryptocurrencies, emerging data reveals a different narrative.
He noted, “EVERYONE THOUGHT THE GENIUS ACT WAS ABOUT CRYPTO REGULATION. THE DATA JUST PROVED IT WAS SOMETHING ELSE ENTIRELY.”
The initial buzz surrounding the bill faded after just 48 hours, overshadowed by discussions of tech regulation and stablecoin rules. However, new statistics paint a starkly different picture of the bill’s implications.
Embedded within the 47 pages of the legislation was a critical requirement: every dollar of stablecoin must be backed 100% by US Treasury bills, eliminating any alternatives, such as cash in banks or corporate bonds.
At the time the GENIUS Act was enacted, the stablecoin market cap stood at approximately $200 billion. Today, that figure has risen to roughly $309 billion, which can now be legally mandated for purchasing US government debt over just four months.
According to Treasury Secretary Bessent’s official projections, this trend could lead to $3 trillion in purchases by 2030.
Anslem noted that the implications of this requirement are profound: the government no longer has to seek out buyers for its debt, as the law creates an automatic buyer each time someone purchases a digital dollar. This essentially means that for every stablecoin created, a corresponding Treasury bill must be bought.
Shift In Regulatory Control?
Research from the Bank for International Settlements reveals that every $3.5 billion in stablecoin growth results in a 0.025% reduction in the government’s borrowing costs.
The expert noted that when the market reaches the projected $3 trillion, this could save taxpayers approximately $114 billion annually, translating to about $900 in lower debt costs for each US household.
Bessent confirmed these findings last week, stating that increased stablecoin issuance means the Treasury does not need to enlarge its bond auctions. In effect, the government has found a new way to finance its spending without relying on traditional buyers.
This shift has not gone unnoticed, even by institutions once skeptical of cryptocurrencies. JPMorgan, for instance, which spent the last decade dismissing crypto as a fraud, announced last month that it would now accept Bitcoin as collateral.
The crux of this transformation lies in the allocation of regulatory control from the Federal Reserve (Fed) to the Office of the Comptroller of the Currency (OCC), which now reports directly to the Treasury Secretary. Anslem concluded his analysis, stating:
The Treasury now controls who can create digital dollars. And the law requires those digital dollars to fund government debt. This is not monetary policy. This is legislative engineering of debt demand. And it’s been operational since July.
Featured image from DALL-E, chart from TradingView.com