Analysis: Stablecoins may become a new tool for U.S. Treasury Secretary Yellen to bridge the deficit

ChainCatcher news, after the GENIUS Act was passed in the U.S. Senate this week, stablecoins could become an important source of funding for the U.S. government, and may even serve as a new tool for U.S. Treasury Secretary Yellen to address the country's deficit. Yellen has previously praised the GENIUS Act and stated that a regulated and evolving stablecoin market could create new buyers for U.S. government debt, boosting private sector demand for U.S. Treasury bonds. In May, Yellen had indicated to the U.S. House Financial Services Committee that some speculate the stablecoin market's demand for U.S. government securities could reach as high as $2 trillion in the coming years.

However, analysts believe that the stablecoin industry is unlikely to fully resolve the U.S. government's debt financing issues and may introduce additional risks, as the extra demand for stablecoins will take time to develop, while the U.S. Treasury needs to issue a large amount of debt securities within a year. If problems arise that prevent the Federal Reserve from lowering interest rates, the U.S. deficit could spiral out of control.