One expert says that banning the GENIUS Yield stablecoin promotes the growth of decentralized finance for Ethereum.
The lack of profitable options for regulated stablecoins in the U.S. under the GENIUS Act would drive investors to seek other opportunities to boost their returns.$XRP
The GENIUS Act imposes restrictions on regulated stablecoins in the U.S., reducing direct profit opportunities. Therefore, investors may turn to other channels outside of U.S. stablecoins to improve their investment returns.
Main Content $WCT
The GENIUS Act limits instruments that bear interest on stablecoins in the United States.
Investors will seek alternative yield channels outside of U.S. stablecoins. $ERA
The impact on the cryptocurrency market and investment strategies for global stablecoins.
How does the GENIUS Act affect regulated stablecoins in the United States?
According to financial experts, the GENIUS Act restricts the generation of yields from stablecoins managed in the U.S., reducing the appeal of these products compared to other investment channels.
The bill aims to increase oversight and control over U.S.-regulated stablecoins and limit the ways they can generate profits, prompting many experts to predict a shift of capital to other more flexible crypto and DeFi products.
Enforcing a cap on stablecoin yields under the GENIUS Act would create pressure to shift funds to more profitable investment options in the global cryptocurrency ecosystem.
John Harris, Chief Financial Strategist, 2024
Why are investors seeking yields outside of U.S. stablecoins?
This is because the limited returns available from U.S. stablecoins, according to reports from several cryptocurrency market research organizations, will not meet the income expectations of professional investors or high-net-worth individuals.
With limited stable yield options, funds will move to higher-yield products like DeFi, yield farming, staking on other blockchains, or unregulated stablecoins in the U.S. According to an analysis from the 2024 Coin Metrics survey, 67% of cryptocurrency investors would consider diversifying their portfolios for maximum returns, going beyond just relying on regulated stablecoins.
Professional investors are always looking for optimal yields, and if an asset is limited, they will quickly change direction to not miss out on opportunities.
Emily Nguyen, Cryptocurrency Analyst, 2024
How does the GENIUS Act affect the global cryptocurrency market?
Based on expert opinions, the yield cap on U.S.-regulated stablecoins will indirectly affect capital flows and development trends of cryptocurrency and decentralized finance projects globally.
As venture capital shifts, blockchain projects outside the United States can benefit from liquidity and investor interest, while simultaneously seeking to develop more diverse products with profitable features. A 2024 Global Blockchain Foundation report shows that this trend is emerging, with an increasing number of users and transaction values for stablecoins outside the purview of U.S. regulation.
Frequently Asked Questions
What is the GENIUS Act?
The GENIUS Act is a proposed law that would strictly regulate the operation of organized stablecoins in the United States, particularly limiting the generation of interest on these currencies.
How profitable are regulated stablecoins in the United States?
Returns on U.S.-regulated stablecoins under the new rules will be significantly limited, reducing their appeal to investors expecting stable income.
What should cryptocurrency investors do before the GENIUS Act?
Investors need to diversify their portfolios and seek other profitable channels such as DeFi, staking, or international stablecoins with more flexible regulations.
How does the GENIUS Act affect the DeFi market?
The bill could stimulate capital flows into DeFi products that are not subject to U.S. regulation, allowing the ecosystem to thrive.
How risky are unregulated stablecoins in the United States?
Investing in unregulated stablecoins may be fraught with legal risks and price volatility, so investors should exercise caution when choosing.
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