U.S. Treasury Secretary Advocates for Stablecoins Over CBDCs

U.S. Treasury Secretary Scott Bessent has expressed his confidence in the global preference for stablecoins over central bank digital currencies (CBDCs). In a recent interview, Bessent highlighted the stablecoin sector as an "exciting new payment rail" that will also serve as a source of demand for the U.S. Treasury market. He emphasized that people worldwide would prefer a private stablecoin backed by U.S. Treasuries with U.S. best practices and regulation over a CBDC issued by entities like the European Central Bank or the People’s Bank of China, which could potentially be shut down by the government for reasons such as posting a controversial message.

Bessent has been actively encouraging members of the House of Representatives to pass the Senate version of the GENIUS Act without amendments. He believes that the bill could be approved by the House by mid-July. The proposed legislation aims to require stablecoin issuers to maintain a 1:1 backing ratio for their assets. Additionally, the bill specifies that stablecoin issuer reserves can be composed of U.S. currency, funds held as demand deposits or insured shares at an insured depository institution, and Treasury bills, notes, or bonds. The Senate passed this bill last month, marking a significant step towards regulating the stablecoin market.

Bessent's comments underscore the growing importance of stablecoins in the global financial landscape. By advocating for the GENIUS Act, he aims to ensure that stablecoins are backed by robust and transparent reserves, thereby enhancing their credibility and appeal. This move is seen as a strategic effort to position the U.S. as a leader in the digital currency space, leveraging its strong regulatory framework and financial stability. The potential passage of the GENIUS Act could set a precedent for other countries, influencing how they approach the regulation of stablecoins and CBDCs.