On Feb. 4, U.S. Treasury Secretary Scott Bessent outlined a novel approach to financing the U.S. government while testifying before the House Committee on Financial Services during a hearing on the Financial Stability Oversight Council's 2025 Annual Report.
In his opening statement, Bessent said that President Donald Trump is building "parallel prosperity" which is "an era of economic expansion where Wall Street and Main Street grow together."
He also aggressively defended Trump's tariff policy and denied that it has anything to do with inflation or unaffordability.
The decline in the value of the U.S. dollar was a hot topic during the hearing. "We always support a strong dollar policy," Bessent said in response to questions from Rep. Bill Foster of Illinois.
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GENIUS Act makes way for financing government, Bessent suggests
During the testimony, Committee Chair Rep. French Hill asked Bessent about the progress on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
It was on July 21, 2025, that Trump signed the GENIUS Act into law. As the name suggests, the legislation aims to regulate stablecoins.
In simple terms, a stablecoin is a type of cryptocurrency that tries to keep its value stable by being pegged to a fiat currency like the U.S. dollar. It generally isn't volatile, unlike traditional cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
A stablecoin like Circle's USDC or Tether's USDT is pegged 1:1 to the U.S. dollar. It means the value of one stablecoin is equivalent to that of one U.S. dollar.
In response to Hill's question, Bessent said the GENIUS Act is an important piece of legislation for bringing back the regulation and creation of digital assets in the country and making the United States the "natural champion."
As part of that vision, Bessent highlighted the potential importance of the GENIUS Act.
He suggested that stablecoins could in fact be "an important feature of financing the U.S. government."
In short, a surge in stablecoin adoption would mean more purchasing of highly liquid assets such as short-term U.S. Treasuries or similar government-backed instruments. It could even translate into a steady source of demand for government debt, though it has raised concerns within the banking industry.
"We are moving with deliberate speed to round out the House and the Senate's intention on that,"Bessent added.
Thanks to the round-the-clock and borderless nature of digital assets, a USD-pegged stablecoin is being treated as a "digital dollar" by a small but growing section of the global finance industry which is using stablecoins for payment settlements when the traditional venues sleep over the weekends or public holidays.
The U.S. government also thinks it can use the GENIUS Act to drive the global adoption of USD-pegged stablecoins to consolidate the dominance of the dollar as the American currency faces debasement .
More than that, the Trump administration also wants to leverage the GENIUS Act to counter the de-dollarization drive undertaken by countries like China, which want to limit the dominance of the U.S. dollar in global trade.
However, the banking and crypto industries are battling over the rewards on stablecoin holdings, which the banks fear could turn Americans away from bank deposits and could therefore reduce the banks' lending capacity.
The crypto industry, on the other hand, argues that banks are being anti-competitive.
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Bessent rules out bailing out Bitcoin
Bitcoin (BTC) also came up during the hearing as Rep. Brad Sherman pressed Bessent on whether the Treasury Department has the ability to intervene directly to "bail out" Bitcoin.
Launched in 2009, Bitcoin is the first decentralized cryptocurrency. Launched to challenge the dominance of Wall Street in the wake of the 2008 global financial crisis, it today has a market capitalization of $1.5 trillion.
However, the crypto flash crash on Oct. 10 last year has sent BTC's price from the record high of $126,080 in early October to a little above $73,000 right now.
Sherman clarified that by "bail out," he meant if the Treasury Department can ask U.S. banks to buy Bitcoin or alter their reserve regulations to accommodate the leading cryptocurrency.
Bessent rejected that notion. He said that neither his role as Treasury Secretary nor his position as FSOC chair allows such action.
He also added that he doesn't have the authority to purchase Bitcoin using taxpayer dollars on behalf of the government.
"I don't have the authority to buy Bitcoin with tax dollars,"Bessent said.
He noted, however, that the federal government is retaining Bitcoin seized through law enforcement actions.
Notably, Trump signed an executive order on March 6 last year to establish the "Strategic Bitcoin Reserve." While it entails adding Bitcoin seized to the reserve, it doesn't include any plan for the U.S. government to buy Bitcoin.
Though Bessent hasn't ruled out "budget-neutral" ways to acquire Bitcoin, there is no clarity on what these "budget-neutral" ways are.
However, he reiterated that the seized Bitcoin is an asset owned by the U.S. government. He also boasted about $500 million in retained BTC growing into more than $15 billion in value, underscoring the asset's potential upside.
Treasury Secretary confirms there is no CBDC plan
Referring to a central bank digital currency (CBDC) as "communist money," Rep. Warren Davidson of Ohio asked Bessent if the administration is planning to create it.
Bessent said there are "absolutely" no such efforts going on and said he assumed the Federal Reserve isn't considering one either.
A CBDC is a digital form of a country's sovereign fiat currency, issued, regulated, and backed directly by its central bank.
In July last year, the House of Representatives passed the CBDC Anti-Surveillance State Act to block the Fed from issuing or testing a CBDC without explicit congressional approval. The move signaled Republican resistance to what the party views as a potential tool for state surveillance.
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Bessent hails Trump Accounts
Rep. Andy Barr of Kentucky brought up Trump Accounts for babies born in the next few years.
The Trump accounts program is part of the Working Families Tax Cuts (Section 70204) provision of the One Big Beautiful Bill Act (OBBBA) that Trump signed into law in July last year.
It includes a pilot program contribution of $1,000 from the U.S. Treasury for children who are born between Jan. 1, 2025, and Dec. 31, 2028, are U.S. citizens, and hold a valid Social Security number.
Bessent said everyone will own a piece of the American economic engine with Trump Accounts, which he suggested will also boost economic literacy.
Coinbase (Nasdaq: COIN), the largest crypto trading exchange in the U.S., has supported the initiative and said it will match government contributions to Trump Accounts for eligible children of its employees.
Robinhood Markets (Nasdaq: HOOD), the e-trading platform popular for its crypto and tokenized stock offerings, also pledged similar support to Trump Accounts in December last year.
Trump Accounts will launch on July 4, 2026.
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This story was originally published by TheStreet on Feb 4, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
