US Senate Passes GENIUS Stablecoin Bill, Boosting Crypto Stocks but Raising Treasury Market Risks
The US Senate has passed the GENIUS Stablecoin Bill with strong bipartisan support, introducing comprehensive regulation for stablecoin issuers. The bill mandates anti-money laundering compliance and requires stablecoins to be fully backed 1:1 by US dollars or short-term Treasuries. This legislative move sharply boosted shares of Coinbase (COIN) and Circle (CRCL), as market sentiment turned bullish, anticipating greater regulatory clarity and increased institutional adoption of stablecoins such as USDC—the world’s second-largest stablecoin by market cap. Supporters view the framework as an opportunity to reinforce the US dollar’s dominance and drive demand for Treasuries. However, experts, including academics and former Federal Reserve officials, warn of potential systemic risks: the rapid expansion of the stablecoin market—from $2 billion in 2019 to a projected $230 billion by early 2025—could strain Treasury market liquidity if large-scale redemptions occur during volatility or issuer failures. Heavy reliance on short-term Treasuries may crowd out other bond buyers, alter government debt management, and introduce new vulnerabilities to both the stablecoin and broader financial markets. The bill now heads to the House, where its final form and ultimate impact will depend on ongoing legislative negotiations and political developments. Crypto traders should watch for further regulatory changes, market volatility, and shifts in liquidity as the regulatory landscape evolves.
Bullish
The Senate’s passage of the GENIUS Stablecoin Bill is seen as a bullish development for the cryptocurrency market in the immediate term, especially for regulated stablecoins like USDC and companies such as Coinbase and Circle. The regulatory clarity is expected to boost institutional adoption, legitimize stablecoins, and attract additional capital into the crypto space, as evidenced by the surge in related stock prices. However, the bill also introduces potential systemic risks to the Treasury market and the financial system if stablecoin issuers become large holders of short-term Treasuries and face stress events. Over the long term, these risks could introduce volatility or tighter regulation, possibly tempering the initial bullish sentiment. For now, the positive market reaction and anticipated institutional inflows outweigh the caution, maintaining a bullish outlook in the short term.