Hagerty's GENIUS Act Boosts Dollar Dominance and Treasury Demand

Senator Bill Hagerty of Tennessee has highlighted the potential benefits of his GENIUS Act in solidifying dollar dominance over digital currencies and driving demand for U.S. Treasuries. The act, which was signed into law last year, requires stablecoins pegged to the U.S. dollar to hold reserves in assets like short-dated Treasury bills.

Hagerty claims that this will create a structural demand for short-term Treasury bills and potentially lower borrowing costs for governments. According to an August study from the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution and the Aspen Economic Strategy Group, stablecoins could increase demand for Treasury bills by $400 billion to $2.3 trillion by 2030.

The GENIUS Act has already seen some impact, with shares of Circle Internet Group, the issuer of the USD Coin (USDC), rallying over 20% last week in anticipation of legislation coming together. However, despite the initial boost, CRCL stock was down over 2% on Tuesday morning.