Welcome to read the 19th issue of (Stablecoin Weekly).
The (GENIUS Act) has produced unexpected market reactions since its implementation:
USDT supply surged by billions of dollars while the compliant USDC supply grew weakly in the short term.
Against the backdrop of the "stablecoin interest ban," yield-bearing stablecoins have rapidly expanded by exploiting regulatory loopholes: USDe supply surged, Coinbase and PayPal packaged yields as "rewards," and Coinbase even launched an "Embedded Rewards SDK," while Anchorage and Ethena Labs leveraged tokenized assets like BlackRock's BUIDL to build institutional-level compliant yield channels.
Privacy has become a new focus: ZKP and DID can provide solutions for institutional payments that "verify compliance without disclosing information," alleviating privacy pain points for enterprises entering the stablecoin space.
Market overview and growth highlights
The total market capitalization of stablecoins reached $269.696 billion (approximately $269.7 billion), with a week-on-week increase of $2.606 billion (approximately $2.6 billion). In terms of market structure, USDT continues to dominate, accounting for 61.25%; USDC ranks second with a market capitalization of $64.502 billion (approximately $64.5 billion), accounting for 23.92%.
Blockchain network distribution
Top three networks by stablecoin market capitalization:
Ethereum: $135.786 billion (approximately $135.8 billion)
Tron: $82.995 billion (approximately $83 billion)
Solana: $11.431 billion (approximately $11.4 billion)
Top 3 networks with the fastest weekly growth:
Berachain: +96.57% (USDT share 43.15%)
XRPL: +49.84% (RLUSD share 49.11%)
Sei: +47.95% (USDC share 85.96%)
Data from DefiLlama
US (Bank Secrecy Act) and privacy requirements for stablecoin payments
After the US stablecoin bill was implemented, privacy became the next focus for regulation and the market.
As the stablecoin market capitalization breaks through $270 billion and quickly enters the mainstream payment system, the on-chain "complete transparency" begins to expose new issues. Since every transaction on the public chain is permanently visible, for businesses, it's equivalent to making their entire financial history, supply chain information, and compensation structure public. For retail investors, this may just be a hassle, but for businesses and institutions, it represents an unacceptable hard threshold. This means your competitors can track every payment in real-time, and if this issue is not resolved, the penetration of stablecoins in commercial payments and institutional settlements will be severely restricted.
If privacy becomes a concern, the penetration of stablecoins in commercial payments and institutional settlements will be hindered. Coinbase's Chief Legal Officer Paul Grewal recently pointed out that legislation such as the (GENIUS Act) must be synchronized with upgrades to the (Bank Secrecy Act) to be effective. The current model is inefficient, further centralizing sensitive data storage into a "honeypot" coveted by hackers, and does not perform well in anti-money laundering efforts.
Grewal emphasized that privacy and security are not zero-sum games. Technologies such as zero-knowledge proof (ZKP) and decentralized identity (DID) can achieve "compliance verification without exposing original information," allowing institutions to see only verification results rather than all data, thus balancing data minimization and precise regulation. He calls for the US Treasury to take the lead in establishing a public-private collaboration mechanism, prioritizing the remodeling of compliance links that can quickly adapt to ZKP, focusing monitoring on key data points of suspicious transactions, and supplementing with AI risk control models to improve screening efficiency. This can protect privacy without compromising regulatory accuracy and clear the biggest obstacle to institutional implementation of stablecoins, positioning the US to gain an advantage in the institutionalization and internationalization of digital assets.
The "reward economics" of stablecoins under the US interest ban
Regulatory restrictions often spur unexpected innovations. For example, the (GENIUS Act) prohibits stablecoin issuers from paying interest to users, originally intended to curb risky behaviors, but unexpectedly gave rise to explosive growth in yield-bearing stablecoins. Since the passage of the act, the supply of such products like Ethena's USDe has increased by billions of dollars, with their yield mechanisms relying on exchange funding rates rather than Treasury bonds, successfully circumventing legal restrictions.
In the regulatory vacuum, Coinbase and PayPal have restructured stablecoin returns into "rewards," circumventing restrictions that only apply to issuers in the regulations. As a distributor of USDC, Coinbase returns Circle's yields to users; PayPal continues to offer a 4.5% annualized return by isolating issuer risks through Paxos. Anchorage and Ethena Labs have even linked stablecoin yields to tokenized assets like BlackRock's BUIDL, building institutional-level compliant yield channels.
Paying interest to token holders has become a key means of attracting capital in mature and emerging markets. Coinbase has even API-ified "interest rewards" through the embedded wallet SDK, lowering the threshold for developers to integrate annual yield features; in high-inflation markets like Latin America, Slash's USDSL offers a 4.5% annual reward, quickly attracting capital inflows combined with the depreciation resistance of dollar assets. Stablecoins are utilizing more complex and compliant financial engineering to efficiently transmit underlying asset returns, reshaping user relationships and value distribution patterns.
Keywords of the Hong Kong (Stablecoin Regulation) that came into effect—transparency and full-chain regulation
The Hong Kong (Stablecoin Regulation) officially came into effect, sparking widespread discussion in the market about mandatory KYC, offshore stablecoin policies, and DeFi compatibility. In fact, the core of this regulation is not "comprehensive bans" but rather controlling stablecoins "issued in Hong Kong" or "denominated in Hong Kong dollars," particularly targeting tokenized assets related to the renminbi. The circulation of offshore stablecoins such as USDT and USDC in the secondary market is not directly restricted by this. Hong Kong's strategy is clear, mastering the issuance source and focusing high-value scenarios, such as renminbi asset tokenization and offshore renminbi stablecoins, to shape "quasi-sovereign settlement tools," differentiating competition from the US market-driven model and the EU's unified standards.
The keywords of this regulation are transparency and full-chain regulation. From issuance, custody, clearing to distribution, strict standards are set for the entire lifecycle, with very high licensing thresholds. Downstream custody, distribution, and clearing also need to meet compliance requirements. Banks, payment institutions, and on-chain infrastructure providers will be incorporated into a unified framework, transitioning the distribution ecosystem from "open access" to "permitted access." In this context, infrastructure providers mastering MPC wallets, on-chain compliance, and capital risk control capabilities will become core partners for banks and tech giants.
The strictness of regulation also brings new challenges to the industry. It means that issuers need to assume final compliance responsibilities for downstream ecosystems (including custody, distribution, clearing, and other third parties). Any participant wishing to enter this ecosystem must meet both technical and institutional compliance. This compels the industry to move toward specialization, creating significant opportunities for infrastructure providers. For example, it requires technological infrastructure providers to help issuers elevate private key security to a trusted foundation through multi-signature, MPC, HSM, and other decentralization mechanisms, achieving a balance between asset sovereignty and legal accountability traceability. This technical solution upgrades wallets from a simple backend tool to an entry point for a compliant security system.
Market adoption
JPMorgan: DeFi and asset tokenization growth is still "disappointing"
Key points overview
The total value locked (TVL) in DeFi has not yet recovered to the 2021 peak, with the main participants remaining retail investors and crypto-native enterprises, while traditional institutions are nearly absent;
The global tokenized asset scale is only about $25 billion, described by analysts as "quite insignificant," with over 60 issued tokenized bonds totaling a value of $8 billion and almost zero secondary market trading;
Institutional adoption faces three major obstacles: lack of coordinated cross-border regulation, legal ambiguity of on-chain investments, and insufficient guarantees for smart contract execution and protocol security.
Why it matters
This report reveals a disconnect between the actual application of DeFi and tokenization and market promotion. Despite the continuous improvement of infrastructure and the emergence of KYC-compliant vaults and licensed loan pools, traditional financial institutions remain cautious. The report indicates that the traditional financial system is evolving toward faster and lower-cost settlement and payment driven by fintech, which may undermine the necessity of blockchain systems, suggesting that the crypto industry needs to develop more compelling institutional-level application scenarios.
Remitly activates stablecoin technology to optimize cross-border payment business and will launch multi-currency digital wallet services
Key points overview
Remitly will launch a multi-currency "Remitly Wallet" in September, supporting fiat and stablecoin storage, especially targeting users in countries with high inflation or currency volatility;
The company is collaborating with Stripe's Bridge to offer stablecoin payment options to users in over 170 countries, expanding the existing fiat payment network;
Remitly has integrated dollar stablecoins like USDC into its internal financial operations, achieving round-the-clock capital flow, reducing pre-deposit requirements, and improving capital efficiency.
Why it matters
This marks the beginning of mainstream cross-border payment companies adopting stablecoin technology on a large scale. By integrating stablecoins into its core business, Remitly not only provides value preservation solutions for users in high-inflation areas, but also addresses the liquidity challenges faced by traditional remittance systems. This innovative model will accelerate the application of stablecoins in practical payment scenarios, providing more efficient and cost-effective solutions for hundreds of millions of people worldwide who rely on cross-border financial services, especially in markets with limited financial infrastructure.
Tether CEO: 40% of blockchain transaction fees come from USDT transfers
Key points overview
Tether CEO Paolo Ardoino tweeted that 40% of blockchain transaction fees are used for USDT transfers, a figure covering 9 major public chains;
Hundreds of millions of users in emerging markets use USDT every day to hedge against currency devaluation and inflation risks, making it one of the most active blockchain applications globally;
In the crypto context, “transactions” usually refer to buying, selling, swapping, and arbitraging activities on exchanges. These activities typically occur within the exchange's internal systems or liquidity pools, without generating independent on-chain transfer fees each time. When a USDT transfer occurs on-chain and incurs a fee, it usually means that funds are being moved between different addresses or wallets. Such scenarios can be categorized as “actual use” rather than mere speculation.
Why it matters
This data highlights that USDT has become the dominant application in the blockchain ecosystem, far exceeding other use cases. Paolo predicts that the future competitive landscape of blockchain will revolve around Gas fee optimization and USDT fee payments, reflecting that stablecoins have evolved from mere transaction mediums to critical solutions for real-world financial needs, especially in economically unstable regions. This phenomenon also proves that blockchain technology is playing a substantial role in financial inclusion.
Macro trends
Mizuho Bank: Coinbase's Q2 financial report shows that Circle USDC's profit margin is shrinking
Key points overview
Mizuho analysts estimate that Circle earned about $625 million in interest income from USDC reserves in Q2, of which $332.5 million was paid to Coinbase;
With new distribution partners like Binance joining, analysts believe Circle's net reserve income rate will face greater pressure, with structurally high distribution costs continuing to grow;
After the passage of the GENIUS Act, JPMorgan and Bank of America are set to launch their own stablecoins, intensifying competition in the US dollar stablecoin market.
Why it matters
Despite Circle's strong IPO performance, Mizuho maintains a "underperform" rating and an $85 price target, believing the market underestimates the risks facing USDC. As Circle expands its distribution network, the previously exclusive stablecoin profit-sharing model for Coinbase is being disrupted, which may weaken Circle's profitability. With expectations of interest rate cuts and traditional banks entering the market, USDC's competitive advantages are being challenged, which has profound implications for the overall stablecoin market landscape.
The US Treasury Department has dramatically expanded short-term Treasury bond issuance, with stablecoins becoming new buyers
Key points overview
The US Treasury will auction $100 billion in four-week Treasury bills, a record high, an increase of $5 billion from the previous auction, while maintaining the size of eight-week and seventeen-week Treasury bills;
Short-term Treasury yields exceeding 4% have attracted a large number of investors, with $16.7 billion flowing into short-term Treasury ETFs in the second quarter, doubling year-on-year;
The Fiscal Advisory Council noted that the "increase in stablecoin issuance" has become a new source of demand for Treasury bonds, as the (Genius Act) requires stablecoin issuers to hold safe assets such as Treasury bonds.
Why it matters
The Trump administration clearly prefers short-term financing strategies, with Treasury Secretary Bascent stating that the cost of issuing long-term debt is too high in the current interest rate environment. The demand for stablecoins has become an important variable in the Treasury bond market, and regulatory laws requiring stablecoin issuers to hold safe assets are creating new structural buying pressure. Meanwhile, global central banks are reducing their allocations to dollar assets in favor of gold, with US Bank predicting that gold prices could surpass $4,000, reflecting growing market concerns about the sustainability of US debt.
Since the passage of the (GENIUS Act), the supply of yield-bearing stablecoins has surged
Key points overview
Since the signing of the Genius Act on July 18, the supply of the revenue-generating stablecoin Ethena's USDe has increased by 70% to $9.49 billion, making it the third-largest stablecoin by market capitalization;
Sky's USDS supply grew by 23% to $4.81 billion in the same period, ranking fourth by market capitalization. These stablecoins provide yield to holders through a staking mechanism;
USDe's current annualized staking yield is 10.86%, while USDS is 4.75%. Considering the US inflation rate of 2.7% in June, the real yields are 8.16% and 2.05%, respectively.
Why it matters
(Genius Act) prohibits stablecoin issuers from directly providing yields to holders, unexpectedly giving rise to explosive growth of yield-bearing stablecoins. Investors are turning to stablecoins that provide yields through protocol-native staking mechanisms to circumvent regulatory restrictions. The overall stablecoin market has grown from $205 billion to $268 billion this year, with analysts predicting it could approach $300 billion by year-end. This phenomenon shows that despite tightening regulations, market demand for high-yield dollar alternatives remains strong and is driving a new wave of innovation and adoption in DeFi applications.
New product delivery
Former Apple engineer launches privacy-protecting crypto Visa card Payy
Key points overview
The Payy Visa card enables privacy payments through zero-knowledge proof (ZKP) and a self-built blockchain, such that users' stablecoin transaction amounts are not publicly visible on-chain;
The card was developed by Polybase Labs, founded by former Apple iOS engineer Sid Gandhi, over three years, ensuring transaction privacy and compliance;
Payy is designed for ordinary users, focusing on a minimalist entry experience and user-friendliness, allowing users to self-custody stablecoin storage and usage without understanding blockchain.
Why it matters
Payy solves a key pain point in crypto payments—transaction privacy and usability. Traditional blockchain payment solutions expose user transaction records on public chains, while Payy achieves transaction privacy protection while maintaining regulatory compliance. This represents an important step toward mainstream adoption of crypto payments, providing a viable daily payment solution for self-custodied stablecoins and has the potential to become a true alternative to traditional banking systems.
MetaMask may collaborate with Stripe to launch the stablecoin mmUSD
Key points overview
An erroneously released Aave governance proposal reveals that MetaMask is collaborating with payment giant Stripe to launch the dollar stablecoin mmUSD, with the M^0 platform also participating in support;
The proposal indicates that mmUSD will become the "cornerstone asset" of the MetaMask ecosystem, natively integrated into all its wallet, transaction, trading, and yield services;
The proposal was quickly deleted, with Aave Chan Initiative founder Marc Zeller stating that the timing of the announcement was "premature," but confirming the authenticity of the proposal's content.
Why it matters
This is another tech giant entering the stablecoin market after PayPal and Robinhood. As one of the largest crypto wallets, MetaMask has partnered with top payment processor Stripe to launch a stablecoin, which may accelerate the integration of stablecoins into Web3 and traditional payment fields.
Coinbase launches an embedded wallet toolkit to simplify the onboarding process for Web3 users
Key points overview
Coinbase adds Embedded Wallets SDK tools to its developer platform (CDP), allowing developers to seamlessly integrate self-custody wallet functionality into applications;
This SDK includes built-in features such as cryptocurrency deposit channels, token swaps, and 4.1% annualized yield for USDC, aimed at eliminating the trade-off between user experience and self-custody risks;
Unlike traditional wallets, users can log in directly via email, SMS, or OAuth without needing a browser extension or memorizing a seed phrase, significantly simplifying the onboarding experience.
Why it matters
This move reflects Coinbase's key layout in Web3 infrastructure strategy, promoting large-scale adoption by lowering development barriers. The new tools operate on the same system that supports Coinbase DEX, providing enterprise-level security and addressing one of the major pain points in the crypto space: the complex user onboarding process. This aligns with Coinbase's overall strategy to reshape wallets into super applications, further solidifying its position as a bridge between crypto and traditional internet.
US digital bank Slash launches a stablecoin issued by Stripe's Bridge, enabling non-US companies to easily receive and pay in USD and stablecoins
Key points overview
San Francisco digital bank Slash launches dollar stablecoin USDSL issued by Stripe's Bridge platform;
This stablecoin is designed to provide businesses with dollar payment capabilities without needing a US bank account for global payments, reducing settlement times and foreign exchange costs;
This move comes as the GENIUS Act has been signed into law, providing a regulatory framework for the US stablecoin industry and issuers.
Why it matters
With the clarification of the stablecoin regulatory framework, fintech companies are accelerating their entry into this field. Slash's use of Stripe's Bridge platform to issue stablecoins represents a new trend of integration between traditional finance and crypto technology, which is expected to address efficiency and cost issues in cross-border payments. This also indicates that as the regulatory environment becomes clearer, the application of stablecoins in commercial payments is moving from concept to practice.
Trump-associated project World Liberty launches USD1 stablecoin loyalty program
Key points overview
World Liberty Financial, supported by the Trump family, announced the launch of the USD1 points program, similar to airline mileage models, collaborating with exchanges like Gate for the first batch;
Users can earn points by trading USD1 pairs, holding USD1 balances, staking USD1 for yields, using in approved DeFi protocols, and interacting with the WLFI mobile app;
The USD1 stablecoin launched by World Liberty Financial in April claims to be fully backed by short-term US Treasury bonds, dollar deposits, and other cash equivalents, and is issued by BitGo Trust Company.
Why it matters
Donald Trump and his three sons serve as ambassadors or advocates at World Liberty Financial, raising concerns about potential conflicts of interest due to this business-political connection. The USD1 points program combines stablecoins with a loyalty reward model, representing a new direction for stablecoin projects seeking user stickiness in an increasingly competitive environment, and reflects a trend of closer interaction between the government and the crypto industry.
JPMorgan launches an on-chain repo solution based on the Kinexys blockchain
Key points overview
JPMorgan, in collaboration with HQLA-X and Ownera, launches a "cross-digital ledger solution" allowing repo traders to exchange funds and securities using blockchain deposit accounts on the Kinexys network;
This tool supports full lifecycle management of repo transactions, from execution to collateral management to settlement, and can specify settlement and maturity times down to the minute;
The first phase of the solution can handle daily trading volumes of up to $1 billion, designed as an industry-grade platform that supports future expansion to multiple trading venues, collateral sources, and digital cash instruments.
Why it matters
JPMorgan is leading blockchain innovation in traditional banking, with Kinexys (formerly Onyx) becoming central to the bank's digital asset strategy. This platform is expected to support various digital assets such as deposit tokens, stablecoins, and central bank digital currencies, reducing market fragmentation. With JPMorgan launching the JPMD stablecoin-like asset and establishing a partnership with Coinbase, this move marks a shift from experimental to practical application of blockchain technology on Wall Street and sets new standards for institutional-level digital asset infrastructure.
Regulatory compliance
Paxos fined $48.5 million by New York regulators due to its partnership with Binance for BUSD
Key points overview
Paxos Trust Company will pay a $26.5 million fine to the New York State Department of Financial Services (NYDFS) and will additionally invest $22 million to improve its compliance program;
Regulators found that Paxos did not conduct adequate due diligence on its partner when issuing the BUSD stablecoin in collaboration with Binance in 2018, and that its anti-money laundering procedures were deficient;
Paxos accepted Binance's claim that it had "completely restricted US users" without conducting independent verification, and NYDFS ordered Paxos to cease minting BUSD in 2023.
Why it matters
This penalty shows regulators' strict scrutiny of stablecoin issuers' partnerships, especially with offshore exchanges. Although Paxos stated that these issues were identified and fully resolved two and a half years ago, this case serves as a wake-up call for the entire stablecoin industry, reminding issuers to conduct rigorous due diligence on partners and establish robust compliance frameworks. With the implementation of the (Genius Act) and the expansion of the stablecoin market, regulatory scrutiny of stablecoin issuers will become stricter, potentially exposing stablecoin issuers collaborating with problematic exchanges to greater legal risks.
Trump signs executive order to halt banks' "unfair practices" against cryptocurrency companies
Key points overview
President Trump signs executive order prohibiting federal regulators from imposing additional oversight on banks serving crypto businesses based on "reputational risk";
The order aims to end "Operation Choke Point 2.0," preventing banks from denying services to crypto companies for political reasons or subjective concerns about high-risk industries;
The Federal Reserve, OCC, and FDIC have committed to no longer considering "reputational risk" when assessing bank client relationships, and House Financial Services Committee Chairman Hill and Senator Lummis have expressed support.
Why it matters
This executive order fundamentally removes the subjective tools used by regulators, forcing banks to make decisions based on actual legal and financial risks rather than vague reputational concerns. It clearly establishes the legitimacy of the crypto industry, ensuring its equal right to access banking services just like other industries. Against the backdrop of the government actively adjusting the regulatory framework, this move will reshape the relationship between banks and crypto companies, promoting deeper integration between traditional finance and the digital asset industry.
Capital layout
Tether acquires shares in MiCA licensed exchange Bit2Me, leading a $32.7 million financing round
Key points overview
Stablecoin issuer Tether acquires a minority stake in Spanish crypto exchange Bit2Me and leads a €30 million ($32.7 million) financing round, with the transaction expected to complete in the coming weeks;
Bit2Me is the first Spanish-language exchange to obtain an EU MiCA framework license, allowing it to provide services in 27 EU member states as a crypto asset service provider (CASP);
This investment will fund Bit2Me's expansion in the EU and Latin America (starting with Argentina). The exchange, founded in 2014, currently serves 1.2 million users.
Why it matters
This is Tether's strategic move to re-establish its position in the European market following tightening MiCA regulations. As several exchanges have delisted or deprioritized USDT over the past year, Tether is creating compliant market channels for its stablecoin by investing in licensed exchanges. This demonstrates how Tether is leveraging its massive profits (record $4.9 billion last quarter) for strategic investments, expanding its business across different regulatory environments globally.
Ripple will invest $200 million to acquire the stablecoin payment platform Rail
Key points overview
Ripple announces the acquisition of stablecoin payment platform Rail for $200 million, expected to be completed in Q4 2025;
Rail is expected to handle over 10% of global stablecoin payments by 2025, with a global market size of about $36 billion;
This acquisition will enable Ripple to provide enterprise-level stablecoin payment solutions, supporting various digital asset payments like RLUSD and XRP, allowing customers to use deposit and withdrawal services without holding cryptocurrencies.
Why it matters
This is Ripple's significant investment following its $1.25 billion acquisition of crypto-friendly broker Hidden Road in April. It signifies the company's accelerated expansion into the stablecoin market. As Ripple actively applies for MiCA licenses in the EU and RLUSD obtains regulatory approval in the Dubai International Financial Centre, the company is expanding its stablecoin business globally. This move will transform Ripple from a major cross-border payment solution provider into a comprehensive financial services platform, reflecting intensified competition in the institutional-level stablecoin service market.
