The great stablecoin nothing burger

Deutsche on stablecoin regulation in the US.

1. Stablecoin legislation cements USD supremacy

The GENIUS Act mandates that all stablecoins be backed 1:1 by high-quality, lowrisk liquid assets – specifically, US Treasury bills with maturities under 93 days, insured bank deposits, or physical US coins and currency (including Federal Reserve notes). Issuers must disclose their reserves monthly. The regulation codifies a standard already adopted by major players such as Tether (~$150bn), whose USD-pegged stablecoins represent over 61% of the total stablecoin market cap. Tether now ranks among the largest holders of US Treasuries globally, and with USD-denominated coins representing over 99% of the total stablecoin market cap, the GENIUS Act formalizes stablecoin issuers’ role as quasi money market funds.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.