The legalization of stablecoins within the U.S. financial system entails significant risks, according to experts from the Roscongress Foundation

Stablecoins, they argue, will form a parallel monetary circulation system with limited regulatory capacity to monitor cash flows and forecast liquidity needs. Therefore, their legalization poses major risks to financial stability. This conclusion is presented in the analytical review entitled «Stablecoin Instead of a Promissory Note: How Donald Trump Digitizes the Public Debt Bubble», prepared by Roscongress Foundation experts.

In July of this year, the Donald Trump administration approved the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), which establishes the legal status of stablecoins within the U.S. financial system. The stablecoin market capitalization stands at USD 250–280 billion, giving regulation of this sector systemic importance.

According to analysts, Trump’s team is likely pursuing three interconnected goals. First is weakening the influence of the Federal Reserve (Fed) on monetary policy by forming a large short-term funding segment outside of its control. Second is strengthening the international position of the dollar through the integration of U.S. currency into cryptocurrency payment systems. Third is attracting a new class of investors to the Treasury securities market, those who traditionally avoid government oversight and public bonds but are eager to invest in crypto instruments.

The new structure of public debt ownership through stablecoin issuers opens additional ways for the U.S. administration to influence the Treasury market. The situation is compared to the abolition of the gold standard in 1971: the government is creating a new financial instrument to attract investment in national debt while retaining the ability to change the rules if necessary.

Forecasts for the future size of the stablecoin market vary widely: J.P. Morgan projects USD 500 billion by 2028, Standard Chartered expects USD 2 trillion by the same date, Bernstein predicts USD 4 trillion by 2035, U.S. Treasury Secretary Scott Bessent has cited USD 2 trillion in the near term, while Citigroup forecasts USD 4 trillion by 2030.

The most serious risks from stablecoin market expansion may emerge in the money market fund sector, which traditionally dominates short-term Treasury bills. The entry of stablecoin issuers as large buyers creates competition for a limited supply of short-term securities. In the event of a shock comparable to the 2008 crisis or the subsequent money market fund turmoil, a massive sell-off of Treasury bills could occur as issuers attempt to meet redemption obligations. If confidence in stablecoins collapses, holders may rush to convert them into regular dollars, forcing issuers to liquidate tens of billions in Treasuries simultaneously to cover withdrawals.

Stablecoin issuers operate outside the perimeter of traditional banking regulation, and their transactions are not monitored by regulators in real time. This complicates liquidity flow forecasting in the short-term funding market. The emergence of a nontransparent sector in short-term Treasury trading, with potential operations amounting to hundreds of billions of dollars, would fundamentally alter the environment for conducting monetary policy. The Fed would lose its ability to precisely calibrate liquidity supply, as it could no longer anticipate the actions of stablecoin issuers and their clients. This would reduce the effectiveness of monetary policy tools and might require much larger regulatory interventions to maintain interest rates within target ranges.

The full analytical review is available on the Roscongress Foundation’s website and its Zen channel.