Investment Sector Preferring US-Supervised Stablecoins Over Central Bank Digital Currencies, According to Treasury Secretary Scott Bessent's Claims.
In a recent interview with Bloomberg, U.S. Treasury Secretary Scott Bessent expressed his enthusiasm for stablecoins, particularly those denominated in U.S. dollars, as an "exciting new payment rail." This stance forms part of a broader strategic approach to leverage digital assets to strengthen the U.S. financial position and maintain the dollar's dominance as a global reserve currency.
The focus on stablecoins is closely tied to the legislative developments such as the GENIUS Act, which was passed by the Senate last month. This bill mandates a 1:1 reserve ratio for stablecoin issuers using high-quality assets like U.S. Treasury bills, U.S. currency, funds held as demand deposits or insured shares at an insured depository institution.
Secretary Bessent is confident that people around the world will choose stablecoins over central bank digital currencies (CBDCs) issued by other countries' central banks. He encourages members of the House of Representatives to pass the Senate version of the GENIUS Act "as is" and advocates for the bill to make its way through the House by mid-July.
The potential impacts of this emphasis on stablecoins could be significant. The requirement for stablecoin issuers to hold U.S. Treasury bills as collateral could lead to increased demand for these assets, potentially reaching $2 trillion by 2028. This could enhance the market stability and liquidity of U.S. Treasuries, strengthening the dollar's role as a global reserve currency.
Moreover, the push for regulated stablecoins could streamline cross-border payments and improve financial efficiency by providing a clear regulatory framework for digital assets. This could make international transactions swifter and more secure, benefiting businesses and consumers alike.
It is important to note that the GENIUS Act, if passed, would potentially apply to stablecoin issuers, but it does not specify whether it would apply to all stablecoins or only those issued in the United States.
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[Disclaimer: This article is for informational purposes only and should not be taken as financial advice. The reader is encouraged to do their own research before making any investment decisions.]
Investing in stablecoins, which are supported by the passing of the GENIUS Act, could potentially increase demand for U.S. Treasury bills and enhance the market stability of U.S. Treasuries. This legislation could streamline cross-border payments, improving financial efficiency by providing a clear regulatory framework for digital assets, benefiting businesses and consumers alike.
