Circle President Testifies That Regulated Digital Assets Strengthen Treasury Demand
Heath Tarbert, president of stablecoin issuer Circle, told Congress on Sept. 2 that placing digital-dollar infrastructure under US regulatory rules could reinforce the network effects that support the currency’s global role.
Tarbert framed stablecoin and digital asset legislation as a tool of dollar statecraft. Regulated stablecoins can spread private use of dollar-denominated tokens, change how issuers hold reserves, and add demand for short-term Treasuries, according to his testimony.
The timing reflects a shift in reserve composition. In Q1 2026, the dollar accounted for 57.13% of allocated global foreign exchange reserves, up from 56.42% in Q4 2025, according to International Monetary Fund data tracked via COFER. The Federal Reserve estimated stablecoin market capitalization at $317 billion as of April 6, 2026, with roughly 98% of stablecoin value denominated in dollars per Bank for International Settlements research.
Tether and Circle have significantly increased their holdings of short-term US debt. Bills represented 53% of the two issuers’ combined assets as of September 2025, Treasury Borrowing Advisory Committee data shows. Since 2022, Tether and Circle have increased their bill holdings by $70 billion, though this represents only 1% of Treasuries outstanding.
The regulatory framework advancing through Congress addresses reserve structure. The GENIUS Act, enacted in July 2025, requires issuer frameworks to include one-to-one permitted reserves, redemption at par, disclosures, supervision, and financial-crime compliance. The Treasury issued a rulemaking notice in August 2025, with a general effective date for GENIUS main requirements scheduled for Jan. 18, 2027. A broader restriction on unlicensed stablecoin issuers is scheduled to begin July 18, 2028.
The Senate Banking Committee advanced a companion bill, CLARITY, by a 15-9 vote. An updated merged Senate text was released July 22. CLARITY addresses the trading and intermediary layer above stablecoins and allocates jurisdiction between the SEC and CFTC.
Federal Reserve staff analysis found USDC held high-quality reserves equal to its stablecoin liabilities. Tether reported total reserves at 1.04 times liabilities but higher-quality reserves at only 0.74 times liabilities, indicating potential reserve composition concerns.
Tarbert acknowledged that payment technology cannot substitute for sound economic policy and that digital infrastructure cannot preserve dollar primacy on its own. Bank for International Settlements researchers expect near-term effects to appear mainly in private stores of value and means of payment rather than official reserve functions. They also warn that broad adoption of dollar stablecoins could accelerate private currency substitution and weaken domestic monetary-policy traction in emerging markets.
Central banks retain responsibility for deciding which currencies they hold. Fed staff warned that complex intermediation, vertical integration, and deeper links to traditional finance can increase opacity and contagion risk in stablecoin systems.
