The GENIUS Act mandates stablecoin issuers to hold 100% reserves in cash or T-bills with maturity ≤ 93 days. This creates a mechanical demand for T-bills, making them the collateral commodity for the new system.
By mid-2025, Tether and Circle held $160 billion in T-bills, exceeding most sovereign nations’ holdings, which mechanically compresses short-term yields. A $2 trillion stablecoin market could absorb all net new T-bill issuance. The Act prohibits direct interest payments to stablecoin holders. This is circumvented through a three-entity structure: tokenized fund issuer, tokenization platform/transfer agent, and underlying asset custodian. A smart contract, via an oracle, reads the T-bill portfolio’s yield, deducts fees, and issues new tokens or adjusts redemption value. Legally, this is an automatic distribution by the transfer agent, not an interest payment by the issuer. BlackRock’s BUIDL fund exemplifies this, distributing net yield on-chain monthly to its holders.
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