The passage of the GENIUS Act by the United States Congress changed everything. We are now seeing a new paradigm emerge which is going to alter the entire payments system.
It is obvious everything is going digital. AI operates, presently, exclusively in the digital realm. This is something that few consider when discussing the topic of money.
An AI agent is not going to have a bank account. It will also not be able to utilize credit cards. Here is where the development of digital currencies over a decade ago enter the picture. These are ideally suited for AI agents.
Stablecoins are the killer app for cryptocurrency. We can debate how decentralized they are (hence no DApp) due to the fact that they are heavily regulated. Banks and other financial institutions are gearing up.
This will lead to usage by billions of people globally. My guess is 2026 is the year this really takes off. Banks are still a bit slow to get involved although they are having to build out their infrastructure.
One company that is not waiting is Tether.
Stablecoins Heating Up: Tether With Compliant Coin
The leading stablecoin company is taking steps to ensure they are in compliance.
One of the keys to the GENIUS Act was the fact that each stablecoin had to be backed by either cash or highly liquid assets such as US T-Bills or Repo contracts. Tether was already the largest holders of US Treasuries in the industry so compliance didn't seem like an issue.
Nevertheless, the company announced the release of a new token. I surmise this is to make reporting easier, only focusing upon those which have to be in compliance.
On January 27, Tether officially launched USAT — a U.S. dollar-backed stablecoin subject to federal regulation in the United States. Developed under the federal stablecoin framework established by the GENIUS Act, USAT is issued by Anchorage Digital Bank, the first federally regulated stablecoin issuer in the U.S. Bo Hines has been appointed CEO of Tether USAT. Cantor Fitzgerald serves as the designated reserve custodian and preferred primary dealer for the token. Targeted at the U.S. market and digital payment infrastructure, USAT will go live on its first batch of platforms including Bybit, Crypto.com, Kraken, OKX, and Moonpay. Meanwhile, USDT will continue operating globally. Currently, Tether Group ranks as the 17th largest holder of U.S. Treasury bonds worldwide.
The last part is key.
With many projecting the demise of the United States, one of the overlooked aspect to this is the fact that issuers will end up holding a lot of these bills.
Tether is the leading issuer, with $186 billion in tokens issued. This is a small amount when we consider the deposit base of the likes of JPMorgan.
Trillions In Bank Holdings
United States banks are going to acquire trillions of dollars in US Treasuries due to their stablecoin involvement.
My prediction was $2 trillion. That is what I felt was a good target for the banking system.
Scott Bessent, the Treasury Secretary, put this number at a minimum of $3 trillion. Some are even projecting higher.
We have to keep in mind that most of what we are forecasting really does not account for traffic (transactions) generated by AI agents. This is a major unknown at this point since the industry is in its embryotic stage. Another couple of years will tell us where things are going.
AI agents are just being rolled out. Thus far, they are aids to what people manually do in the digital world. The concept of monetization has not really taken hold. Of course, there are agents in the financial world, doing things such as trading. The commercial arena is overlooked.
When that hits, stablecoin usage will skyrocket. It is vital to consider the impact of agents that operate 24/7 with no breaks. It is another example of where humans simply cannot compete with automation.
My view is this will be led by the traditional banks. After all, this is what people are accustomed to dealing with. As a percentage, the number of people who have a digital wallet is few. In other words, their first wallet will be provided by the banking system.
The stablecoin Act requires US Treasuries. As the bank totals grow, their buying of these assets will follow.
Bessent was well aware of the impact this will make. Tether is the 17th largest holder of US Treasuries at this moment simply due to stablecoin issuance.
Bank of America and Chase (JPMorgan) will dwarf that.