Following the implementation of the first stablecoin legislation in the United States, known as the GENIUS Act, financial circles have expressed varying opinions regarding stablecoins’ role in increasing demand for the US dollar and boosting short-term US Treasury bond purchases. Experts from major Wall Street investment firms such as JP Morgan, Deutsche Bank, and Goldman Sachs believe it is premature to consider stablecoins as a market-transforming factor. According to a report by the US Treasury Secretary, the stablecoin market could grow from the current $300 billion to $3 trillion by the end of the next decade, potentially increasing demand for short-term US Treasury bonds. However, some analysts argue that funds backing stablecoins primarily originate from existing investment sources, implying that stablecoins may merely shift holdings among current Treasury bond holders rather than create new demand.
Stablecoins are cryptocurrencies pegged to stable assets like the US dollar to maintain price stability, aiming to protect against market volatility and facilitate digital transactions. The approval of the GENIUS Act has granted this sector legal protection, which may foster its growth and enhance consumer confidence. While the growing use of stablecoins could improve transparency and efficiency in the financial system, experts remain cautious due to financial risks, regulatory challenges, and market uncertainties. The expansion of the stablecoin market and its influence on US Treasury bond demand will be closely monitored in the coming years to assist policymakers and investors in making informed decisions.
Source: binance
