The ban on the issuance of yield-generating stablecoins in the United States has created a strong development opportunity for DeFi solutions on the Ethereum platform.
The removal of yield-generating stablecoins promotes DeFi as the main channel for investors to seek passive income and protect asset value against the impact of fiat currency inflation.
MAIN CONTENT
The GENIUS Act prohibits the issuance of stablecoins with yield-generating mechanisms in the United States.
DeFi solutions on Ethereum are considered important alternative channels for generating passive income.
DeFi helps investors maintain the value of their assets against USD inflation.
How does the ban on yield-generating stablecoins affect the cryptocurrency market?
This is a clear move by the U.S. government to prevent the issuance of yield-generating stablecoins, blocking investment opportunities through this type of stablecoin. According to analyst Nic Puckrin, this event opens up opportunities for DeFi to develop more strongly as DeFi provides passive income through various forms such as staking or lending.
The GENIUS Act (on the morning of July 19, 2023) officially bans income-generating stablecoins based on yield, limiting the profit-making ability of traditional and institutional investors through stablecoins.
Why does DeFi on the Ethereum platform benefit from the new regulations?
According to Christopher Perkins, President of CoinFund, the USD not generating income is causing it to gradually lose value. DeFi becomes a necessary income-generating solution to preserve assets in the context of rising inflation. Therefore, DeFi is expected to become an effective alternative market for yield-generating stablecoins.
The removal of yield-generating stablecoins transforms the summer of stablecoins into the summer of DeFi, where users can find opportunities to generate income to protect the value of their assets.
Christopher Perkins, President of CoinFund, 2023
DeFi on Ethereum not only supports staking but also offers lending services with attractive interest rates, drawing many individual and institutional investors seeking stable income sources while avoiding the risk of USD devaluation.
How does the ban on yield-generating stablecoins affect individual and institutional investors?
With the new regulations, investors can no longer rely on stablecoins to generate passive income as they did before; they need to seek alternative channels. Smart investors are turning to DeFi for stable yields and various asset protection mechanisms within this ecosystem.
DeFi is an important solution that helps investors overcome the impact of fiat currency inflation as the USD continues to devalue, providing real income from digital assets.
Nic Puckrin, Cryptocurrency Analyst, 2023
What popular DeFi forms help generate passive income?
Staking, lending, and yield farming are the three main forms of profit generation for investors on the Ethereum platform. For example, staking helps lock Tokens to receive rewards, while lending provides interest from lending Tokens to others, and yield farming leverages liquidity from Liquidity Pools to generate profits.
Form Yield Generation Mechanism Advantages Risks Staking Lock Tokens in the network, receive rewards Stable, ensures security Risk of long-term capital lock-up Lending Lend Tokens to receive interest Periodic income, flexible Default risk from borrowers Yield Farming Provide liquidity to receive rewards Effective when the market grows Token price volatility risk
Frequently Asked Questions
Does the ban on yield-generating stablecoins affect DeFi?
On the contrary, the ban promotes the strong development of DeFi as it serves as an alternative channel for investors to generate effective passive income.
Why is DeFi important during the USD inflation season?
Yield-generating DeFi helps investors preserve their assets when the USD depreciates due to a lack of intrinsic income-generating mechanisms.
What are the most popular forms of income generation in DeFi?
Staking, lending, and yield farming are effective and widely applied forms on Ethereum.
What should investors pay attention to when switching to DeFi?
Always assess risks such as Token price volatility and capital lock-up duration, and choose reputable platforms to ensure safety.
How does the ban on stablecoins affect individual investors?
Individual investors must seek other channels to generate passive income, mainly DeFi solutions on Ethereum.
Source: https://tintucbitcoin.com/genius-act-cam-stablecoin-loi-nhuan-defi/
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