The GENIUS Act is very close to being voted on in the U.S. Senate, before the Memorial Day recess (May 26).
It is one of the most important things in 2025, a regulatory proposal for stablecoins that has all the makings to pass and bring hundreds of billions of dollars into the crypto market.
TL;DR: You're not bullish enough about DeFi. Here’s why:
"GENIUS ACT" is a bill that has already passed through a Senate committee with significant support (18-6) and is now moving toward broader consideration. The acronym stands for "Guiding and Establishing National Innovation for U.S. Stablecoins." In practice, the idea is to legitimize backed stablecoins.
Earlier this year, some fresh regulatory interpretations already started facilitating banks' renewed involvement in crypto. The GENIUS Act is the missing piece needed to strongly connect traditional finance (TradFi) to stablecoins. This is the easiest and most immediate way to bring institutional money into the cryptocurrency market.
There are various financial assets, particularly treasury bonds, that offer monthly yields and are custodied by banks. Tokenizing these assets would allow them to be traded 24/7, globally. This sector is known as Real-World Assets (RWA), involving the creation of digital tokens representing real assets outside the crypto ecosystem. BlackRock, the world's largest asset manager (with over $10 trillion under custody), is among the many interested in this emerging market. Creating digital versions of fixed-income securities is a useful way to create new stablecoins. With clear and favorable regulation, the RWA sector will thrive. Popular stablecoins like USDT and USDC will become significantly more viable for everyday use. Trump has mentioned multiple times that he wants to boost the stablecoin sector, viewing it as a means to strengthen the dollar, which makes sense.
If billions (or even trillions) of dollars flow into the stablecoin market, what could be the consequences? Today, one of stablecoins' greatest utilities is serving as a bridge to purchase BTC and other tokens, allowing easy transfers between platforms without lengthy registration processes.
Thus, it’s clear that one consequence of the GENIUS Act would be bringing money into Bitcoin and other cryptos. But that's just a superficial view. What could truly drive prices upward is adoption: people and businesses using cryptocurrencies in everyday activities beyond mere price speculation. Stablecoins are excellent for payments (both online and in-store), international transfers, everything we've always discussed but hasn't quite taken off yet. Legal hurdles have always been the primary barrier, and they're about to fall. Soon.
In a scenario where this legislation becomes reality, which projects would benefit most? Let’s think together.
Most stablecoins currently reside on Ethereum, which is also the oldest and most tested network for this purpose. Where might this new liquidity flow? Aside from Ethereum itself, DeFi projects will benefit most directly, as they offer immediate utility for these tokens. The legislation specifically targets backed stablecoins, not algorithmic ones. In this context, Frax Finance has made significant progress, partnering with BlackRock to launch frxUSD, a stablecoin backed 100% by an RWA fund called BUIDL (BlackRock’s USD Institutional Digital Liquidity Fund), which tokenizes T-bills, cash, and repos. Big stuff. It’s worth mentioning that Frax has been rapidly growing in the liquid staking segment for ETH (benefiting from Ethereum’s growth and ETH staking in ETFs), alongside numerous initiatives in the RWA field. Frax is one of my biggest bets for this new regulatory landscape emerging in the U.S.
Another project that directly benefits from growth in stablecoins is Curve, as it remains the most relevant decentralized exchange (DEX) for stablecoins, virtually without competition. If many new stablecoins emerge, it's evident that widespread everyday usage will initially focus only on the most popular options (e.g., USDC). So, where will users swap JPM Coin (the supposed new JP Morgan stablecoin) for USDC? Curve will be the go-to place. With its deep liquidity mechanism, proven to have the best pools for stablecoin swaps, Curve will be key in this new landscape. Indeed, this has already begun, as deUSD, another stablecoin issued via BlackRock’s RWA initiatives, is now trading on Curve. I can easily envision a future where BlackRock recognizes the opportunity to create its own liquidity pools on Curve, earning additional yields. But wait, these yields can be further optimized through bribing mechanisms via Convex.
You see where I'm going, right? Another point: with the era of high interest rates in TradFi nearing an end, DeFi yields become attractive again, especially in a bull market. This represents yet another likely favorable convergence. The new regulatory framework is still under discussion, but the RWA sector isn’t waiting around. The real game hasn't even begun yet.
