Senator Bill Hagerty (R-TN) says that one segment of the crypto industry will likely become the largest holders of US Treasuries.

In a new interview on CNBC Television, Hagerty says stablecoin issuers will likely purchase massive amounts of US Treasuries as reserve funds to ensure the digital assets remain pegged to the dollar.

Says Hagerty,

“Stablecoin issuers will be the largest holders of US Treasuries in the world.”

Hagerty introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which aims to establish federal regulations around the use of stablecoins. The bill is currently being debated by Congress.

Asked what will back stablecoins, Hagerty says,

“It’s not going to be equities. It’s going to be high quality short-term assets, either short-term US Treasuries or cash. I think the majority of it will be US Treasuries.”

On Monday, Hagerty celebrated the bill moving closer to becoming law.

“Tonight, the Senate moved forward on the GENIUS Act. This groundbreaking, bipartisan legislation will bring America’s payment system into the 21st century. The GENIUS Act skyrockets the United States with a digital payment framework with the fastest rails possible. It will ensure US dollar dominance. Customers will be protected, the demand for US Treasuries will balloon to the tune of more than $1 trillion, and innovation in the digital asset space will thrive in the United States going forward. I look forward to making history with my colleagues this week.”

The potential legislation would require stablecoin issuers to maintain backing for their assets on a 1:1 ratio. The bill also states that stablecoin issuer reserves can be made up of US currency; funds held as demand deposits or insured shares at an insured depository institution; and Treasury bills, notes or bonds.