Stablecoins and the Banking System: Impact on Deposits and Insurance

The US Senate is poised to pass the GENIUS Act, legislation that will set clear rules for stablecoin issuance and backing. This will allow companies issuing dollar-backed tokens to store reserves in banks, buy Treasury bonds, or lend money to banks just like money-market funds do. As a result, this rapid growth within the crypto space is impacting traditional banking systems. While stablecoins don’t directly eliminate deposits from banks, they shift where those funds go. 💰, and expose financial institutions to increased risk. 💥