The GENIUS Act legalizes stablecoins in the U.S., requiring them to be backed by U.S. dollars or Treasuries. This is expected to raise demand for dollar-backed assets and bolster the dollar’s status as the reserve currency. Following the act's signing, Bitcoin and Ether showed notable price increases, demonstrating potential ties to regulatory support for cryptocurrencies. The act has positioned stablecoin issuers as quasi money market funds, channeling liquidity into dollars. As a result, the dollar has seen a modest recovery after struggling earlier in the year.
The GENIUS Act specifically requires that stablecoins in the U.S. be backed by dollars or U.S. Treasuries, locking in demand for dollars and U.S. bonds.
At a time when US dollar hegemony is under question, the GENIUS Act has been seen as a win by the Trump administration, aiming to secure the dollar's status.
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