The “Stability” of Stablecoins: Money Revolution or Future Crisis?

In June 2025, US Treasury Secretary Scott Bessent took to X, proclaiming that the GENIUS Act, the first federal framework for stablecoins, “could grow [stablecoins] into a $3.7 trillion market by the end of the decade.” That same month, a New York Times opinion piece appeared under the headline: “The Genius Act Will Bring Economic Chaos.” Subjects of polemics and praise alike—Stablecoins, the new kids on the cryptocurrency block, backed by their dads’ money and a fancy new Act, have arrived. Across all spectrums of analysis, from mainstream media to fintech reports to political pronouncements, one key consensus rings loud and clear: stablecoins will uproot the core of our financial system.

Stablecoins are digital tokens whose value is pegged by their issuers to a stable asset, most often the US dollar. Unlike Bitcoin or other cryptocurrencies that are susceptible to price volatility, stablecoins maintain a steady price, ensuring that tokens can always be exchanged for an equal amount of dollars. Despite first appearing in 2014, stablecoins have broken out of their corner of the crypto world, crossing into the financial mainstream with the passage of the GENIUS Act in July 2025. Today, stablecoins collectively represent over $300 billion in market capitalization. JP Morgan Global Research projects that this figure could swell to $750 billion within a few years, with more optimistic reports charting numbers between $2 trillion and $4 trillion over the course of the decade. The GENIUS Act has positioned these coins to reshape America’s currency, payments, and financial stability. 

The GENIUS Act provides stablecoins with the regulatory framework they so desperately need. A watershed moment for the future of money, this Act imposes stringent reserve requirements for issuers. Issuers are mandated to back stablecoins with highly liquid assets, such as short-maturity Treasury bills, to ensure that the issuer can redeem the tokens for dollars at any point. When redemption occurs, the issuer sells from its reserve of cash and Treasury bills, transferring dollars back to purchasers at the promised 1:1 ratio. The Act also clarifies who can issue stablecoins: both federally insured banks, such as Bank of America or JPMorgan Chase, and approved non-bank entities. The second category encompasses established issuers like Circle as well as corporate giants like Amazon and Walmart, both of which began considering proprietary stablecoins around the time of the GENIUS Act’s passage. With legislative authority on their side, the credibility of stablecoins as financial instruments has surged.

Stablecoins promise an array of improvements that would meaningfully rewire America’s payment infrastructure. Due to their high speed and low cost, stablecoins make for superior mediums of transactions than wire transfers and credit card payments. Traditional rails often take one to five business days to be settled and shut down on weekends, holidays, and after business hours. Blockchain networks, on the other hand, settle 24/7, often within seconds or minutes. Cost is another advantage. Traditional payment systems run through multiple intermediaries, slowly and covertly siphoning money off the top. According to McKinsey, the cost per transaction ranges from $15 to $50 for international wires, between $0.20 and $1.50 for automated clearing houses, and from 1.5% to 3.5% for credit cards. Stablecoins incur a fee of less than $0.01 per transaction. Alongside bank fees, stablecoins also eliminate hidden fees from middlemen such as Venmo, which charges a 1.75% fee for its instant transfer option. These costs ultimately flow back to consumers in the form of higher prices. As a crossbreed of fiat and cryptocurrency, stablecoins promise the best of both worlds: eliminating the wild price swings of cryptocurrencies while still providing users with the speed, efficiency, and digital reach of crypto transactions. 

For those with a cautionary view of stablecoins, the GENIUS Act should be nothing short of terrifying. Stablecoins’ most glaring risk to financial stability is the possibility of a run. The strict transparency and liquidity requirements that the GENIUS Act maintains help ensure investors’ confidence in stablecoins and 24/7 redemptions. However, the Treasury market is not 24/7. Imagine a scenario where holders of Circle’s stablecoin went to redeem en masse on a Saturday night. Unable to sell Treasury bills due to the market’s closure, Circle would be unable to redeem everyone. A crisis of confidence would hit, and a run on stablecoins would cause waves of redemptions. The resulting mass selling of Treasury bills would lead to widespread interest rate volatility and market contagion. As the Treasury market underpins US government borrowing and financial stability, an economic crisis of disastrous proportions would ensue, reverberating throughout the global financial system. 

McKinsey estimates that “stablecoin transactions could surpass legacy payment volumes in less than a decade—and potentially sooner.” Progress or chaos is coming, and it would be prudent of us to prepare.

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