The US Treasury Department has strongly endorsed stablecoins backed by government securities, arguing that they could reinforce the global supremacy of the US dollar. Treasury Secretary Scott Bessent made the case for digital assets during testimony before the Senate Banking Committee, defending new legislation aimed at regulating the stablecoin market.

Bessent expressed support for the GENIUS Act, which mandates that stablecoins be fully backed by high-quality liquid assets such as US Treasury securities. He said the framework would not only reduce financial risks but also create fresh demand for dollar-denominated assets.

Senate Banking Committee Chairman Tim Scott said the legislation could expand dollar dominance, deepen global reliance on US Treasuries, and encourage innovation in digital finance while maintaining stability in the financial system.

Bessent went further, suggesting that stablecoins could become a significant funding channel for the US government. He argued that clear, credible regulation would attract global investors to dollar-backed digital assets rather than foreign alternatives.

Republican lawmakers broadly welcomed the initiative. Senator Bill Hagerty said the move would keep financial innovation within the United States while preserving the dollar’s central role in global markets.

At the same time, Bessent cautioned against the growing influence of central bank digital currencies (CBDCs) in other countries. He framed the debate as a choice between privately issued US dollar stablecoins under strong regulation and state-controlled digital currencies abroad, predicting that the world would ultimately prefer the US model.

Democrats raised concerns about consumer protection, systemic risk, and potential instability in banking deposits. Bessent responded that regulators were coordinating to prevent disruptions, particularly for community banks that rely on stable deposits.

The discussion is being closely monitored in India, where regulators have taken a cautious stance toward crypto and digital assets. India’s fintech sector and global payment firms are watching US policy shifts, as changes in dollar-based digital finance could affect cross-border transactions and remittances.

The hearing signaled bipartisan momentum toward clearer crypto rules, with Treasury officials indicating that broader digital asset legislation could move forward later this year.