Galaxy Model Projects $1.2 T Credit Surge from Offshore Stablecoin Growth Under $GENIUS Act

Context The Treasury‑backed stablecoin framework known as the $GENIUS Act is drawing intense scrutiny from U.S. banks, which argue that digital dollars will siphon domestic deposits. Galaxy Digital’s head of research, Alex Thorn, released a model that challenges that narrative, quantifying the macro impact of compliant stablecoins on Treasury markets and bank balances.

Key Facts - Galaxy estimates 60% to 70% of stablecoin issuance under the Act will originate from non‑U.S. sources. That offshore share dwarfs any domestic migration of deposits. - Imported offshore deposits are projected to be roughly twice the volume of domestic deposit shifts, a 2:1 ratio that undercuts the banking sector’s claim of a domestic drain. - Each newly minted $GENIUS‑compliant stablecoin is expected to create about $0.32 of net U.S. credit. Scaling the model yields $400 billion in credit expansion in a base case and $1.2 trillion in a bullish scenario by 2030. - The Act mandates that issuers hold high‑quality, short‑duration assets—primarily U.S. Treasury bills. Tether (USDT) already holds over $120 billion in T‑bills, making it one of the world’s largest short‑term government‑debt holders. - Galaxy’s projections suggest this demand will compress short‑term Treasury yields by 3‑5 basis points, shaving up to $3 billion off annual U.S. borrowing costs.

What It Means For investors, the data reframes the $GENIUS debate from a threat to banks into a catalyst for credit growth. The offshore capital influx could boost liquidity for U.S. borrowers without eroding domestic bank balances. Stablecoin issuers will need to secure Treasury‑bill reserves, creating a new demand stream for short‑term government debt and potentially lowering Treasury yields.

Developers building on stablecoin infrastructure stand to benefit from a regulated digital‑dollar market that promises institutional access at scale. The projected credit expansion signals a sizable addressable market for payment rails, DeFi protocols, and cross‑border settlement solutions.

Policymakers will watch how the offshore deposit ratio evolves as the Act moves through Congress. The next data point will be the actual volume of Treasury‑bill purchases by compliant stablecoin issuers once the law is enacted.