Now comes the hard part: turning law into policy. The gaps could define the future of stablecoins and the dollar. Check out our deep dive here 👉

Some big risks that we call out:.- No clear redemption rules under stress.- No interoperability standards.- Yield ban politics.- Including permitted stablecoin issuers under the Bank Secrecy Act. 2/.

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🚨The GENIUS Act is now law and it’s the most comprehensive stablecoin regulation to-date. As policymakers now work to build frameworks around the law, they must answer critical questions. 1/.

The big questions for policymakers: do you give stablecoins access to the Fed? Or do you build.guardrails before the next run turns safe US Treasuries into the epicenter of the next crisis?.Read our post here: �.

Is the market prepared to withstand a potential run on stablecoins? Should we be encouraging.stablecoins to buy more treasuries when the implications are potentially disastrous?.

Stablecoins can’t access Fed resources like banks can. They have to go through intermediaries. And if the intermediaries are already at their limits that means.No buyers ▶️falling prices ▶️liquidity spiral.

In March 2020, just a 2% selloff in Treasuries nearly broke the market. The Fed had to act as.the dealer of last resort to stop the market from seizing.

BUT, the few institutions who could buy these Treasuries (broker-dealer banks) might already be.maxed out on Treasuries.

But there’s a problem. There are currently no backstops if a run occurs on stablecoin issuers. They might be forced to sell treasuries fast.

By 2028, the US Treasury Department predicts T-bill demand from stablecoins could hit $1.TRILLION.They’re becoming major players in the same market that the entire financial system depends on.

Circle and Tether now hold $1750B+ in US Treasuries and repos. Conservative portfolio, right?.But. that might not actually be the case. Let’s dig deeper 🧵.

Amazing work! Great to see so many students excited to learn about this technology. Looking forward to future collaboration 🙌.

Calling all computer science lecturers around the world! Want to remotely audit MIT's "Cryptocurrency Design and Engineering" this fall? Sign up now here:

RT @neha: We’re launching DCI Global, a nascent research network to study real-world Bitcoin & stablecoin use, starting with a joint MIT–Un….

4/ .Read the full breakdown from @mitDCI, part of our summer blog series on stablecoin risks exploring the financial and technical risks of stablecoins that also previews insights from our upcoming paper with @MITREcorp.

3/. And most importantly:.Stablecoins rely on decentralized networks, not regulated institutions. That means smart contracts, oracles, validators, bridges… and all the risks that come with them.

2/ .Stablecoins borrow a lot from legacy finance. 🤝They back their liabilities with assets, just like money market funds.🏦They promise to redeem at par, like banks.But analogies only go so far. Stablecoins have novel features that require a new understanding.

🧵1/. Stablecoins are both: . 1) a financial instrument and . 2) novel software . This creates a novel set of risks.Let’s explore further ⛏️.

RT @neha: This was a fun UROP project analyzing CoinJoins on Bitcoin! With Alicia Lin, @IshaanaMisra, and @MadarsV

Watch this interview with our director @nehanarula.