Senate Votes on GENIUS Act to Boost Stablecoin Market and Reduce Federal Borrowing Costs

Treasury Secretary Scott Bessent has highlighted the potential of stablecoins to reduce federal borrowing costs and slow down debt growth. He made these remarks as the Senate prepares to vote on the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. According to Bessent, if Congress passes the bill, stablecoins could significantly impact the financial landscape by 2030.

The GENIUS Act aims to accelerate the expansion of the stablecoin market by establishing clear reserve, audit, and licensing rules. Bessent described the potential outcome as a "win-win-win" scenario for issuers, the Treasury, and consumers. The legislation requires payment stablecoins to hold high-quality, highly liquid assets equal to the tokens in circulation, primarily Treasury bills or insured deposits. This mandate would increase demand for US Treasuries, thereby easing financing pressure.

The Senate is set to vote on the GENIUS Act, with the session scheduled to begin at 4:30 PM Eastern Time. The bill has already passed a crucial hurdle, with the Senate voting 68-30 on June 11 to invoke cloture, ending debate and starting the 30-hour countdown to a final vote. Majority Leader John Thune has placed the measure on the chamber’s last voting block before it moves to the House.

The legislation includes stringent requirements for stablecoin issuers. Accounts holding reserves must be segregated from operating capital, and issuers must implement Bank Secrecy Act programs, conduct customer due diligence checks, and report suspicious activity. Entities with more than $10 billion in liabilities would need a federal charter, while smaller issuers could operate under state regimes that meet federal standards, subject to joint examinations.

The Treasury is directed to publish quarterly reserve audit templates, and the Commodity Futures Trading Commission is granted limited enforcement authority in the spot market. Senate supporters hope that an amendment by Minority Whip Bill Hagerty could expedite the bill's passage by allowing the House to approve it without a conference committee.

Bessent emphasized that the reserve mandate could lead to a surge in private demand for Treasury bills, potentially helping to "rein in the national debt." He also noted that dollar-denominated payment coins could introduce millions of users worldwide to digital-asset rails settled in US currency. The Senate's decision will determine whether these fiscal and market effects materialize.