Technology Category
Game Theory and Economic Paradigms: Mechanism DesignMultiagent Systems: Mechanism DesignReasoning under Uncertainty: Other Foundations of Reasoning under Uncertainty
The Hidden Plumbing of Stablecoins: Financial and Technological Risks in the GENIUS Act Era
🤖 AI Summary
This study addresses the systemic risks posed by the large-scale adoption of stablecoins within mainstream financial systems, with a particular focus on the challenge of maintaining par-value redeemability. Building upon the GENIUS Act framework, the paper develops a multi-layered risk transmission model that integrates Treasury and repo market functions, broker-dealer balance sheet constraints, and on-chain governance mechanisms—synthesizing insights from financial intermediation theory, market microstructure, and blockchain operational logic. The analysis reveals that even prudently backed stablecoins remain vulnerable to destabilization through bank runs, market intermediary bottlenecks, or technological failures. In response, the study proposes a cross-domain coordinated regulatory framework, offering generalizable principles and policy guidance for global stablecoin oversight.
Technology Category
Application Category
📝 Abstract
U.S. dollar stablecoins are increasingly used as payment and settlement instruments beyond cryptocurrency markets. With the enactment of the GENIUS Act in 2025, the United States established the first comprehensive federal framework governing their issuance, backing, and supervision. This paper evaluates the financial, technological, and regulatory risks that may arise as GENIUS-compliant stablecoins scale into mainstream use. We show that maintaining par-value redemption may depend not only on backing-asset quality, but also on the functioning of Treasury and repo markets, the balance-sheet capacity of broker-dealers, and the operational reliability of blockchain-based transaction rails. Even conservatively backed stablecoins can face stress from redemption surges, market-intermediation bottlenecks, or technological disruptions. We argue that durable stability will likely require an integrated approach spanning financial-market infrastructure, prudential regulation, and software governance. While grounded in U.S.\ law, the analysis identifies principles that are relevant for regulators in other jurisdictions developing stablecoin regimes.
Problem
Research questions and friction points this paper is trying to address.
stablecoins
financial risk
technological risk
regulatory risk
GENIUS Act
Innovation
Methods, ideas, or system contributions that make the work stand out.
stablecoins
GENIUS Act
blockchain infrastructure
financial stability
prudential regulation
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