A stablecoin is a digital token meant to always be worth one dollar.

It holds that value only if real assets sit behind each token.

A bill moving through the Senate would write that backing into law.

In June 2025, the Senate moved to pass the GENIUS Act, the first federal stablecoin law.

It passed the Senate on June 17, 2025, by a vote of 68 to 30.

The law requires issuers to hold reserves equal to 100% of tokens outstanding.

Reserves must be cash, bank deposits, or short-term Treasuries, plus a few similar assets.

Large issuers must disclose their reserves monthly and get audited each year.

When you buy a token for a dollar, the issuer takes your dollar and issues one token.

That dollar goes into the reserve, ideally into cash or short Treasury bills.

When you redeem, the issuer takes the token back and returns your dollar from the reserve.

The peg holds as long as the reserve is real, safe, and quick to sell.

Short Treasury bills fit because they are safe and trade easily.

Risky or illiquid reserves are the crack through which a peg breaks.

The first stress point is a run. If many redeem at once, the issuer must sell reserves fast.

Safe, short reserves can meet that. Risky ones cannot, and the peg slips.

That is what happened to some coins in 2022, when weak backing gave way.

The second is transparency. Without regular proof, holders cannot know what really backs the token.

The third is the link to Treasuries. Big stablecoins are now real buyers of Treasury bills.

A stablecoin fully backed by cash and short Treasuries is a simple, sturdy design.

The new law pushes the market toward that model, and that is a real improvement.

What can break is a coin with thin or hidden reserves, which can lose its dollar in a rush.

You can watch the proof. Regulated issuers must publish their reserve makeup each month.

The size and type of those reserves show how quickly a coin could pay everyone back.

A stablecoin is only as stable as the assets behind it, and the reserve is the whole machine.

The GENIUS Act ties the token to cash and short Treasuries, which strengthens the peg.

The next test is the first big redemption wave under the new rules. Watch issuers' monthly reserve reports.