The GENIUS Act requires stablecoin issuers to back their reserves with cash and Treasury securities maturing in 93 days or less, creating direct demand for short-term U.S. government financing. The Treasury Department announced on August 19 that it would double the maximum size of buyback operations in the 10-to-20-year and 20-to-30-year segments, raising aggregate capacity from at least 14 billion to 28 billion dollars. Circle, which manages 71.826 billion dollars in reserves for USDC, held 52.723 billion dollars in overnight Treasury repo and 7.179 billion dollars in short-dated Treasuries as of July 31. A Bank for International Settlements working paper found that a 3.5 billion dollar stablecoin inflow lowers three-month bill yields by roughly 5 basis points at the estimated trough, with no significant spillover to longer maturities. The long-bond market therefore remains dependent on investors willing to bear duration risk, as stablecoin reserves do not provide a direct channel to 10-, 20- or 30-year debt.
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