ProShares Debuts Stablecoin-Ready ETF Compliant with GENIUS Act

TLDR

• ProShares launched the GENIUS Money Market ETF (IQMM), designed to support stablecoin issuers with liquid, short-term U.S. government securities.
• The ETF is structured to comply with the GENIUS Act, which mandates stablecoin issuers to back their tokens with safe, liquid assets.
• IQMM focuses on cash and Treasury bills with maturities of 93 days or less, ensuring liquidity for stablecoin issuers.
• The GENIUS Act, signed into law in July, requires stablecoins to be backed 1:1 by assets that are easily convertible to cash.
• The launch of the ETF comes as the stablecoin market approaches $300 billion, with projections for significant growth in the coming years.

ProShares introduced the GENIUS Money Market ETF (IQMM) on Thursday, a product designed for the growing stablecoin market. This fund aims to support stablecoin issuers by investing in highly liquid assets that meet the requirements of the GENIUS Act. The move comes as the stablecoin sector is projected to grow significantly in the coming years.

ProShares IQMM ETF Targets Stablecoin Issuers

The ProShares GENIUS Money Market ETF (IQMM) was launched to address a gap in the stablecoin market. Under the GENIUS Act, stablecoin issuers must back their tokens with assets that are liquid and low-risk, such as U.S. Treasury bills. IQMM is designed to invest solely in short-term, liquid U.S. government securities, meeting the law’s reserve criteria.

The law restricts eligible reserve assets to Treasury bills with maturities of no longer than 93 days. ProShares designed the fund to comply with these rules, ensuring that issuers can quickly access liquidity without selling longer-term bonds at a loss during periods of market volatility.

GENIUS Act Compliance Ensures Stability

The GENIUS Act, signed into law last July, is central to the structure of IQMM. The law aims to create a safer, more stable environment for the stablecoin market by requiring 1:1 backing with liquid, safe assets. ProShares’ ETF aligns with the law’s requirement, ensuring that stablecoins are supported by assets that can easily be converted to cash.

By focusing on cash and short-dated government securities, the fund provides issuers with the liquidity needed for daily redemptions. This ensures that stablecoin issuers can meet user demands without having to sell more volatile, longer-dated securities during times of stress in the financial markets.

Stablecoin Market Growth Prompts Regulatory Action

The launch of the IQMM fund occurs as the stablecoin market approaches $300 billion in circulation, with Tether’s USDT and Circle’s USDC leading the sector. Policymakers are preparing for rapid expansion, with some forecasts suggesting stablecoin circulation could reach $2 trillion by 2028. Wall Street projections are more optimistic, with some firms predicting the market could grow as large as $4 trillion.

Treasury Secretary Scott Bessent has indicated that stablecoins could become a significant part of the financial system in the coming years. His forecasts suggest the market could grow substantially by the end of the decade.