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US TREASURY REPORT ON STABLECOINS MULLS UPSIDE OF OFFERING INTEREST
A presentation last week to the US Treasury’s Borrowing Advisory Committee (TBAC) explored the impact of stablecoins on the demand for short term Treasuries. One topic was mentioned repeatedly – the potential for stablecoins to offer interest.
The last iteration of the Senate’s stablecoin bill, the GENIUS Act, introduced a clause that banned the payment of stablecoin interest before receiving a positive vote by the Senate Banking Committee.
According to the minutes of the TBAC meeting, “There was robust discussion concerning the potential implications of interest bearing stablecoins versus non-interest bearing stablecoins, and the extent to which growth in stablecoins would result in net new demand for Treasury securities rather than a reallocation of demand from banks and money market mutual funds.”
The President’s Executive Order on digital assets made clear the intention to promote the use of US dollar stablecoins beyond US borders. White House AI and crypto czar David Sacks was very clear that the goal is to increase demand for US Treasuries,
which helps to lower the cost of servicing the United States’ massive debt.
The TBAC stablecoin report
The TBAC report used a figure from Standard Chartered research that estimates stablecoins will grow to $2 trillion by 2028 assuming stablecoins don’t pay interest. As an aside, Citi also recently published forecasts. The mid-April capitalization of stablecoins was $234 billion, which accounts for approximately $120 billion investment in short-dated Treasuries. Combining that with Standard Chartered’s figure, the report estimates that stablecoin investment in Treasuries will expand to $1 trillion by 2028.
If stablecoins were to offer interest, the figure could be quite a bit higher, although no forecast was provided. That would account for a significant slice of the short term Treasury Bill market, which currently has a $6.4 trillion issuance.
A key reason why most global stablecoin regulation has not supported the payment of interest is due to concerns that bank deposits might shift to stablecoins, potentially reducing available credit from banks or making credit more expensive. The TBAC report states that transactional demand deposits at banks totaling $6.6 trillion are most “at risk” from stablecoins.
However, the presentation also explored opportunities for banks and financial institutions, including issuing stablecoins and managing reserves.
Apart from delving into interest-bearing stablecoins, two other issues were floated:
- Allowing stablecoin issuers access to the Federal Reserve
- Allowing access to deposit insurance
This would help reduce the impact of de-peg events.
Readers of the TBAC report might expect to see efforts to remove the interest ban from the GENIUS Act. However, after this TBAC meeting, several pro-crypto Democrats withdrew support for the latest version of the GENIUS Act despite it still including the yield ban.
Backtracking on the yield clause could further delay the progress of the stablecoin bill.
@ Newshounds News™
Source: Ledger Insights
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BREAKING: NEW HAMPSHIRE BECOMES FIRST U.S. STATE TO OFFICIALLY HOLD BITCOIN IN STATE RESERVES
In a major first for the United States, New Hampshire has passed a new law allowing the state to hold Bitcoin as part of its financial reserves. The bill, known as HB 302, was signed into law on May 6, 2025, by the state’s Governor. This makes New Hampshire the first state in the nation to create a Strategic Bitcoin Reserve Fund.
The law gives the state’s Treasurer the power to buy Bitcoin and other major digital assets directly or through a regulated investment product like an exchange-traded product (ETP). However, there’s a limit — the state can only hold up to 5% of its total funds in Bitcoin to balance risk.
To ensure safety, the law requires all digital assets to be stored under strict U.S.-regulated custody, either in state-controlled wallets or with approved custodians. The new policy will officially take effect 60 days after its signing.
The bill was inspired by a model created by the nonprofit group Satoshi Action, which works to educate lawmakers about Bitcoin and digital assets. Dennis Porter, the group’s CEO, said this is more than just a bill — it’s the start of a movement. “New Hampshire didn’t just pass a bill; it sparked a movement,” Porter said.
Several important figures helped make this happen, including Rep. Keith Ammon, an early Bitcoin supporter, Majority Leader Jason Osborne, and the New Hampshire Blockchain Council.
This landmark decision could open the door for other U.S. states to follow New Hampshire’s lead as interest in Bitcoin-backed financial reserves grows nationwide.
@ Newshounds News™
Source: Coinpedia
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