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Investors seeking inflation and geopolitical hedging bought commodity-backed stablecoins 2.6%. Algorithmic and exotic fiat-backed stablecoins performed differently, demonstrating institutional capital prefers fully collateralized, regulated products.
In addition, stablecoins enable new crypto users to access decentralized applications, exchanges, and custody solutions without volatility.
The Genius Act would allow authorized non-bank companies to produce stablecoins under strict reserve requirements with Fed and OCC monitoring.
The measure forbids algorithmic stablecoins not backed 1:1 by cash or Treasuries to mitigate systemic risks without restricting innovation.
The Genius Act may liberate billions in stalled capital by allowing certified stablecoin issuers to use existing banking systems and provide stable, yield-bearing products that fulfill regulatory criteria.
Stablecoin supply rose from $20 billion to $140 billion during the 2020–2021 bull market, while Bitcoin rose from $10,000 to roughly $64,000. Market participants invested in USD-denominated stablecoins before switching to riskier assets like BTC, causing the connection.
