The Act creates a licensing regime for issuers of dollar-pegged payment stablecoins and, in section 4(a)(1), tells them what a reserve may consist of: U.S. coins and currency, Federal Reserve balances, insured deposits, Treasuries of 93 days or less, repos and reverse repos on such Treasuries, money-market funds holding them, and tokenised versions of the same.
The Treasury Secretary's statement on signing day said the law would "lead to a surge in demand for US Treasuries, which back stablecoins," and give the market "the regulatory clarity it needs to grow into a multitrillion-dollar industry."
The Gazette reads the Act as a plumbing diagram: it routes stablecoin dollars into short-dated government debt by law.