Trillions of dollars could flow into the US Treasury market following the approval of a landmark stablecoin bill, according to Treasury Deputy Secretary Michael Faulkender.
Last week, President Trump signed the GENIUS Act into law, establishing a regulatory framework for stablecoins, cryptocurrencies pegged to the US dollar, requiring each token to be fully backed by liquid assets such as cash or short-term US Treasuries.
In a new Bloomberg interview, Faulkender explains in detail how the passage of the stablecoin bill into law would translate to massive demand for US debt.
“We now have a digital asset that has rules of the road established by Congress for what backs those digital assets. It provides enormous amounts of confidence to not only Americans, but our trading partners around the world, who are then willing to make exchanges, to invoice dollars and then be paid via stablecoins because they know that it is an asset that has a value behind it.
Because what is it that backs it? Primarily, it’s going to be T-bills.”
Faulkender notes that while wiring money abroad typically takes a day or two to settle, stablecoins can deliver funds in just seconds.
“And so it’s going to enormously hasten the timeframe for making payments. It’s more secure, it’s more private, it’s significantly cheaper. And so if indeed this does revolutionize the way that international payments are invoiced and paid, then there should be a flocking to this technology. And if all of that trade therefore is even further denominated in stablecoins, then there’s going to be demand for the underlying asset, which are Treasury securities.
We could potentially see on the order of trillions of additional demand.”
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