The GENIUS Act just turned stablecoin companies into stealth buyers of US government debt

So this new law that passed in July was supposed to bring clarity to stablecoins and make them legit payment tools. Under the GENIUS Act, U.S-licensed payment stablecoin issuers have to back every digital dollar with real reserves....specifically US cash, Federal Reserve deposits, short-term Treasury bills, and a narrow set of similar high-quality liquid assets.

Sounds reasonable, right? But here’s the twist. Author Shanaka Perera argues that this basically turns payment stablecoin issuers into forced buyers of US debt. Every time someone mints a regulated dollar stablecoin, the issuer has to park the backing in cash or Treasuries. The US government gets a new, structural source of demand for its short-term debt, and stablecoin companies become a pipeline funneling global demand for digital dollars straight into American government bonds.

Think about it... people in countries with high inflation or capital controls want stable digital dollars. They buy stablecoins. Issuers take that money and mostly park it in US Treasuries and Fed balances. The Treasury ends up with reliable buyers and potentially lower borrowing costs at the front end of the curve.

The concerning part is what happens when this reverses. Some research on stablecoin flows and T-bills suggests that when stablecoin supply shrinks and reserves are unwound, it pushes Treasury yields up more than equivalent inflows push them down. If the stablecoin market ever hits the “hundreds of billions” or trillions and then crashes, forcing issuers to dump a lot of Treasuries in a short window, that could seriously strain the Treasury market and contribute to a broader funding shock.

Perera thinks that’s exactly the kind of moment where the government could come out and say, “private stablecoins are too risky, we need a safer alternative,” and use it to push a central bank digital currency as the fix. With the legal framework, banking rails and digital asset infrastructure already being built out, the pivot wouldn’t be starting from zero. i first bumped into this framing through some GENIUS Act breakdowns on awaken tax and it instantly clicked how neatly all the incentives line up here.

Is this genuine regulatory clarity for digital dollars, or a very elegant backdoor way to create captive demand for government debt (with a CBDC waiting in the wings if it blows up)? Feels like we’re not really having the full conversation about what this means long term.