Stablecoin Issuers Could Become the Largest Holders of U.S. Treasuries by 2030: Senator Bill Hagerty (R-TN)

U.S. Senator Bill Hagerty (R-TN) said stablecoin issuers could become the largest holders of U.S. Treasuries globally by the end of the decade, citing projections from Citibank.

U.S. Senator Bill Hagerty (R-TN) said on Monday that stablecoin issuers could become the largest holders of U.S. Treasuries globally by the end of the decade, adding that they will not be used to back risky assets, reports Benzinga.

What Happened: Speaking in an interview with CNBC, Hagerty highlighted the role of stablecoins in transforming the payments landscape and their backing by short-term U.S. government debt.

"This is a payment mechanism and not to be confused with Bitcoin or something that has a speculative component. By 2030, stablecoin issuers will be the largest holders of U.S. Treasuries in the world," the senator said.

Hagerty further explained that stablecoins, functioning as infrastructure for faster digital payments, will not be used to hold risky assets.

"It's not going to be equities. It's going to be high-quality short-term assets, either short-term U.S. Treasuries or cash," he added.

His comments come as the U.S. Senate has been making progress on the GENIUS Act, a key piece of legislation focused on regulating stablecoins.

The legislation, which aims to provide the country with its first comprehensive regulatory framework for fiat-pegged digital tokens, cleared a 60-vote procedural hurdle on Monday, paving the way for the Senate to move toward final debate and voting on the bill.

The legislation seeks to set up issuers, such as Tether and Circle, with strict rules for holding their tokens in a Treasury-backed bank account or a basket of short-term, highly liquid government-agency securities.

The House of Representatives is working in parallel on its version of the bill, which is expected to be voted on by the full House later this week.

Despite the support of several Republicans and moderate Democrats, the legislation has faced difficulties due to the stance of Democrats like Senator Elizabeth Warren, who is against the bill.

Earlier this month, Democrats pulled back support during a previous procedural vote, raising concerns about national security and anti-money laundering oversight in the bill.

However, several members of Congress are now urging swift action to pass the GENIUS Act before the August recess.

Why It's Important: The bill is a key priority for the cryptocurrency industry, which has been lobbying heavily for its passage.

Industry groups have warned that the lack of clear regulations could lead to issuers moving their operations offshore, ultimately hindering the role of the U.S. dollar in global finance.

Moreover, with the increasing adoption of stablecoins for cross-border payments, industry figures like Steve Chainelli highlight the urgency in passing the legislation to maintain the dollar’s standing.

"The dollar's role in global finance is at stake. We need to act quickly to pass the GENIUS Act and ensure that the U.S. remains at the forefront of the digital asset revolution," Chainelli, a crypto industry executive, warned.