Journalist
Hassan Shittu
Journalist
Hassan Shittu
Share
David Sacks, senior crypto adviser to President Donald Trump, announced on May 21 that bipartisan momentum is propelling the GENIUS Actlandmark stablecoin legislation through the U.S. Senate.
The bill, which aims to bring regulatory clarity to a $200 billion stablecoin market, has cleared an important procedural hurdle with the support of 15 Democrats, making its passage highly likely.
Sacks framed the bill as a long-overdue regulatory fix and a geopolitical and financial inflection point. He argued that by legitimizing dollar-pegged digital assets under federal law, the legislation could dramatically increase global demand for U.S. Treasuries, potentially injecting trillions of dollars into the American financial system.
“We already have over $200 billion in stablecoins—it’s just unregulated,” Sacks told CNBC. “If we provide the legal clarity and framework for this, I think we could create trillions of dollars of demand for our Treasuries practically overnight.”
Generally known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the bill is the most advanced federal effort to date to establish legal guardrails for stablecoins.
If passed, it would authorize the issuance of stablecoins fully backed by U.S. dollars or Treasuries, subject to licensing and reserve requirements under federal oversight.
Trump Ties and Political Tension Cloud Stablecoin Bill Momentum
While the bill’s technical merits have drawn rare bipartisan support, controversy continues to swirl around potential conflicts of interest.
Critics point to the Trump family’s ties to World Liberty Financial, a crypto firm recently launching its stablecoin, USD1, which U.S. Treasuries and fiat reserves reportedly back.
The token has secured a $2 billion investment commitment from Abu Dhabi’s MGX fund via Binance, raising questions about whether the administration’s policy initiatives are aligned with private family investments.
Sacks, who says he divested $200 million in crypto holdings before joining the administration, declined to comment on whether Trump or his family stands to benefit from the bill’s passage.
When pressed on the ethics of presidential crypto ventures, he avoided specifics, instead emphasizing the bill’s transformative economic potential.
Still, the GENIUS Act’s path to final passage isn’t entirely smooth.
Senator Josh Hawley recently added a provision capping credit card late fees amendment that could alienate key financial industry backers and complicate the coalition needed to pass the bill.
Yield-Bearing Stablecoins Signal Industry Shift
Meanwhile, the broader stablecoin ecosystem is evolving rapidly. Once considered regulatory gray zones, yield-bearing stablecoins are gaining legitimacy under the Trump administration’s regulatory shift.
In February, the SEC approved such tokens as “certificates” governed under securities laws rather than banning them. This move opened the door to compliant products offering interest to stablecoin holders, provided they meet disclosure, registration, and investor protection standards.
This move is backed by the growing momentum around the stablecoins. Yield-bearing stablecoins surged to $11 billion in circulation from just $1.5 billion at the start of 2024, now accounting for 4.5% of the total stablecoin supply.
Decentralized protocols like Pendle have emerged as primary beneficiaries. Pendle, which allows users to lock in fixed yields or speculate on variable interest rates, currently holds nearly $3 billion in total value locked (TVL) from yield-bearing stablecoins, making up 30% of the sector’s TVL.
Stablecoins now represent 83% of Pendle’s total TVLup, up from less than 20% a year ago, while traditional assets like ETH have fallen to under 10%.
This shift indicates growing user preference for stablecoin-based yield opportunities at a time when traditional tokens remain volatile and the Federal Reserve maintains high interest rates.
While dominant, legacy stablecoins such as USDT and USDC still do not pass on yield to holders. With over $200 billion in circulation and Fed rates hovering at 4.3%, Pendle estimates that stablecoin holders forgo more than $9 billion in annual interest.
Credit: Source link
