The financial system is quietly upgrading itself. Not through policy or politics, but through technology. While debates over Bitcoin continue, another development is reshaping how money moves: stablecoins.
In July 2025, the United States passed the GENIUS Act, the first federal law establishing standards for U.S. dollar-backed stablecoins¹ ². The Act did not create stablecoins, but it established a regulatory framework that recognizes and defines their role within the financial system. Its passage marked the moment the U.S. financial system officially began connecting with public blockchains, a modernization that offers improvements in speed, cost, and transparency.
What Are Stablecoins?
Stablecoins are digital assets designed to maintain a stable value, typically pegged one-to-one to the U.S. dollar. Each coin is backed by reserves such as U.S. Treasuries or dollars held in bank accounts. They merge the stability of the dollar with the speed and transparency of blockchain networks.
This design enables near-instant, low-cost global transactions that settle 24/7, compared to traditional systems that rely on intermediaries and limited operating hours⁶. For both individuals and institutions, stablecoins offer a faster and more transparent way to transfer and settle value.
The GENIUS Act: A Turning Point
Before the GENIUS Act, stablecoins operated in a regulatory gray area. They were widely used in digital-asset markets but not formally recognized in traditional finance. The Guiding and Establishing National Innovation for U.S. Stablecoins Act changed that by introducing the first federal framework¹ ².
The law requires issuers to:
- Maintain 100% reserve backing, primarily in U.S. Treasuries and dollars.
- Provide monthly audits and public disclosures.
- Follow consumer-protection and interoperability standards.
- Obtain a license to issue stablecoins.
This structure creates transparency and aligns oversight with established financial-market standards.
Stablecoins and the Treasury Market
Under the new framework, both banks and fintechs can issue stablecoins, provided they hold matching reserves. For every dollar of stablecoins created, issuers must purchase a dollar of assets, often short-term U.S. Treasuries.
This has two effects. First, issuers generate revenue from holding Treasuries, giving them a financial incentive to expand stablecoin issuance. Second, it introduces a new and reliable source of demand for U.S. debt⁵.
That demand arrives as foreign Treasury ownership has declined, from about 34% in 2015 to 23% in 2024, as countries such as China reduced their holdings⁵. Stablecoin issuers are helping fill this gap.
The scale is already significant. Tether, the largest issuer, held roughly $98.5 billion in Treasury bills in Q1 2025, making it one of the largest non-government holders of short-term debt³. Circle, another major issuer, manages reserves through a BlackRock fund⁷. Treasury officials have acknowledged that stablecoin demand is now a consideration in issuance planning⁵.
Stablecoins are no longer just a payment mechanism; they are becoming part of the structure supporting Treasury financing.
From Payments to Infrastructure
Stablecoins are also transforming how money moves. Traditional international transfers can take several days and cost $25 or more. Stablecoin transactions typically settle within minutes at a fraction of the cost⁶.
Large institutions are already integrating the technology:
- PayPal has launched stablecoin payment functionality.
- The Global Dollar Network is partnering with firms such as Robinhood and Kraken.
- BlackRock has introduced blockchain-based Treasury management products⁷.
These examples demonstrate that stablecoins are steadily evolving from digital-asset tools into core components of financial infrastructure.
Expanding Reserve Composition
While most stablecoins remain fully fiat-backed, some issuers are diversifying reserves. In May 2024, Tether added Bitcoin to its holdings, more than 75,000 BTC alongside nearly $100 billion in Treasuries⁹. It also enabled direct stablecoin transfers across the Bitcoin network through the Omni protocol, a software layer built on top of the Bitcoin blockchain.¹⁰
These changes do not alter the U.S. dollar peg but illustrate an emerging blend of traditional and digital assets within reserve management.
Why This Matters
Stablecoins are now embedded within the mechanics of the U.S. financial system. Key implications include:
- Efficiency: Faster, lower-cost transactions for individuals and businesses.
- Treasury Demand: Issuers represent a growing source of demand for short-term U.S. debt.
- Transparency: Regular audits and public reserve reporting.
- Global Access: Cross-border payments that operate continuously.
- Integration: Participation from major financial institutions.
Stablecoins remain fiat-based and therefore subject to the same inflationary dynamics as the U.S. dollar. However, they are accelerating the modernization of payment systems and contributing to Treasury demand.
One thing worth keeping in mind: stablecoins don’t work exactly like money in a traditional bank account. They live in digital wallets, which means access depends on the private keys you control. If those keys are lost or compromised, the funds can be too. And unlike bank deposits, these digital dollars aren’t covered by FDIC insurance.
Also, stablecoin transactions usually can’t be reversed. If you send funds to the wrong address or make an error, there isn’t a central customer-service desk that can unwind things. So while stablecoins can move faster and cheaper, they do require more personal responsibility around security and verifying details.
The GENIUS Act did not create this shift, but it legitimized it. Stablecoins are here now, and they are already reshaping how value moves through the financial system.
Disclaimers
Chris Millar Financial Advisor affiliated with Wilde Wealth Management Group. 7025 N. Scottsdale Rd STE 110 & 115, Scottsdale AZ 85253. Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and Registered Investment Adviser. Cetera Partner Practice (W), LLC, an affiliate of Cetera Advisors LLC, owns a minority equity interest in Pinnacle Wealth Advisors, LLC, the holding company of Wilde Wealth Management Group. Cetera is under separate ownership from any other named entity.
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Works Cited
¹ The White House. “Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law.” July 2025.
² Latham & Watkins. “The GENIUS Act of 2025: Stablecoin Legislation Adopted in the U.S.” 2025.
³ Reuters. “Stablecoins’ Step Toward Mainstream Could Shake Up Parts of U.S. Treasury Market.” June 2025.
⁴ PR Newswire. “Stablecoins Set to Reshape $4 Trillion Treasury Market as Corporate Crypto Treasuries Surge.” 2025.
⁵ U.S. Treasury. “TBAC Report: Treasury Borrowing Advisory Committee.” Q2 2025.
⁶ Grayscale. “Stablecoins and the Future of Payments.” 2025.
⁷ Gemini. “BlackRock to Offer $150 Billion Blockchain Treasury Fund.” 2025.
⁸ World Economic Forum. “Global Stablecoin Implications.” July 2025.
⁹ CoinDesk. “Tether Adds Bitcoin to Reserves.” May 2024.
¹⁰ Tether. “USDT Comes to Native Bitcoin Blockchain via Omni.” 2025.