At Any Rate US Rates: Stablecoins – they’re only getting started
Jul 31, 2025
Teresa Ho, Head of U.S. Short Duration Strategy at J.P. Morgan, dives into the evolving world of stablecoins alongside Pankaj Vohra. They discuss how the Genius Act and Clarity Act are shaping the stablecoin market and its implications for Treasury demand. The duo highlights the contrast between stablecoins and traditional money market funds, the challenges of regulatory clarity, and the promising future of tokenized money market funds, emphasizing their role in enhancing liquidity and transparency.
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Stablecoins vs Money Funds
- Stablecoins resemble money market funds in liquidity and asset backing but differ as they do not pay yield directly to holders.
- Stablecoins also serve as a form of payment which money market funds do not, yet redemption guarantees are not fully established.
Genius Act Boosts Stablecoin Legitimacy
- The Genius Act sets clear federal and state guidelines for stablecoin issuers, providing much-needed regulatory clarity.
- This legitimizes stablecoins as an asset class, likely accelerating their adoption in financial markets.
Key Genius Act Provisions
- The Genius Act prohibits yield-bearing stablecoins, allowing only payment stablecoins similar to transactional deposits.
- It mandates one-to-one backing with highly liquid assets but does not clarify if issuers get Fed balance sheet access, posing run risk concerns.