Original Source: TBAC
Author: TechFlow
Stablecoins have undoubtedly been the hot topic in the crypto market over the past week.
With the US GENIUS Stablecoin Bill passing a Senate procedural vote and the Hong Kong Legislative Council passing the "Stablecoin Regulation Bill" on third reading, stablecoins have now become a critical variable in the global financial system.
In the United States, the future development of stablecoins not only concerns the prosperity of the digital asset market but may also have far-reaching implications for Treasury demand, bank deposit liquidity, and US dollar hegemony.
A month before the GENIUS bill passed, the US Treasury's "think tank" - the Treasury Borrowing Advisory Committee (TBAC), delved into a report exploring the potential impacts of stablecoin expansion on US fiscal and financial stability.
As an important component of the Treasury's debt financing plan, TBAC's recommendations directly influence the US Treasury's issuance strategy and may indirectly shape the regulatory path for stablecoins.
So, how does TBAC view stablecoin growth? Will this think tank's perspective influence the Treasury's debt management decisions?
We will use TBAC's latest report as an entry point to interpret how stablecoins have evolved from "on-chain cash" to an important variable influencing US fiscal policy.
Despite experiencing multiple crises, the stablecoin market is gradually recovering in 2024 and keeping pace with the broader digital asset market development. In 2024, the United States launched the first spot crypto ETFs, providing institutional investors with tools to access BTC and ETH.
Currently, the growth of the stablecoin market is primarily driven by three aspects: increased institutional interest, gradual improvement of global regulatory frameworks, and continuous expansion of on-chain application scenarios.
Digital Currency Market Funds and Stablecoins: A Comparison of Two On-Chain Assets
With the rapid growth of Tokenized Money Market Funds (MMFs), an alternative narrative to stablecoins is gradually forming. Although both have similar use cases, a significant difference is that stablecoins cannot become yield-generating instruments under the current GENIUS Act, whereas MMFs can generate returns for investors through underlying assets.
[The rest of the translation follows the same professional and accurate approach, maintaining the original structure and meaning while translating to English.]Potential Impact
Fund Transfer：
The growth of stablecoins may not directly change the total US money supply, but will lead to fund transfers from M1 and M2. This transfer may affect bank liquidity and the attractiveness of traditional deposits.
International Impact：
Stablecoins, as a way to obtain US dollars, may increase the demand for US dollars among non-US dollar holders, thereby increasing inflows into the US money supply. This trend may promote the use and acceptance of stablecoins globally.
Although the growth of stablecoins will not immediately change the total US money supply, its potential as a value storage and monetary acquisition method may have a profound impact on fund flows and international US dollar demand. This phenomenon needs to be addressed in policy-making and financial regulation to ensure the stability of the financial system.
Possible Directions for Future Stablecoin Regulation
The current US stablecoin regulatory framework is similar to the MMF reform requirements after 2010, focusing on:
Reserve Requirements: Ensuring high liquidity and safety of stablecoin reserves.
Market Access: Discussing whether stablecoin issuers can obtain support from the Federal Reserve (FED), deposit insurance, or access to a 24/7 repurchase market.
These measures aim to reduce the risk of stablecoin de-pegging and enhance market stability.
Summary
Market Size Potential
The stablecoin market is expected to grow to approximately $2 trillion by 2030 under continuous market and regulatory breakthroughs.
US Dollar Anchor Dominance
The stablecoin market is primarily composed of US dollar-anchored stablecoins, which focuses recent attention on potential US regulatory frameworks and their legislative impact on stablecoin growth.
Impact and Opportunities for Traditional Banks
Stablecoins may impact traditional banks by attracting deposits, but also create opportunities for banks and financial institutions to develop innovative services and benefit from blockchain technology usage.
Far-reaching Implications of Stablecoin Design and Adoption
The ultimate design and adoption of stablecoins will determine their impact on the traditional banking system and their potential driving force for US Treasury demand.
