The stablecoin bill GENIUS Act has been passed
The sentiment in the crypto market is once again focused on regulatory actions.
On May 19, the U.S. Senate passed the procedural vote for the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025) with a vote of 66-32. This milestone progress marks the imminent establishment of a regulatory framework for stablecoins in the U.S.
As the first comprehensive federal stablecoin regulatory bill in the U.S., the advancement of the GENIUS Act quickly sparked a heated response in the crypto market, with DeFi and RWA sectors related to stablecoins leading the market today.
Will the GENIUS Act become a catalyst for a new bull market?
According to Citigroup's forecast, by 2030, the global stablecoin market size is expected to reach between 1.6 to 3.7 trillion USD. The passage of the legislation provides stablecoins with 'compliance' characteristics and development space, giving traditional companies more reasonable reasons to enter.
The market is also anticipating that the influx of incremental funds will bring about a 'flooding' effect, injecting new liquidity into related crypto assets.
But before that, you should at least understand what the legislation entails and the motivations behind it to provide more convincing reasons for selecting related crypto assets.
From 'barbaric growth' to standardization
The GENIUS Act literally translates to the 'Genius Act,' but it is actually an abbreviation for the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025.
In simpler terms, it is a legislative document for the U.S.
The market's attention is due to the fact that this is the first comprehensive federal regulatory bill for stablecoins in U.S. history. Prior to this, stablecoins and cryptocurrencies have been in a delicate gray area:
What is not explicitly prohibited by law can be allowed, but the law does not provide clear rules on 'how to allow'.
The goal of the GENIUS Act is to provide legitimacy and security for the stablecoin market through a clear regulatory framework while solidifying the dollar's dominant position in digital finance.
In summary, the key contents of the legislation include:
Reserve requirements: Stablecoin issuers must have 100% reserve backing, with reserve assets needing to be high-liquidity assets such as U.S. dollars and short-term U.S. Treasury bonds, and must disclose reserve composition monthly.
Regulatory tiering: Large issuers with a market capitalization exceeding 10 billion USD (such as Tether and Circle) must be subject to direct regulation by the Federal Reserve System or the Office of the Comptroller of the Currency (OCC), while smaller issuers can be regulated by state authorities.
Transparency and compliance: Misleading marketing (such as claiming stablecoins are backed by the U.S. government) is prohibited, and issuers are required to comply with anti-money laundering (AML) and know your customer (KYC) regulations. Issuers with a market capitalization exceeding 50 billion USD must undergo annual audits of their financial statements to ensure transparency.
This also means that the U.S. has a friendly attitude towards stablecoins, provided that they are backed by U.S. dollars and meet requirements for transparency.
Looking back at history, the birth of the GENIUS Act was not an overnight phenomenon but rather the culmination of years of regulatory exploration for stablecoins in the U.S. We have quickly organized the entire timeline of this legislation to help you understand its background and motivations:
The stablecoin market has rapidly developed, but the risks arising from regulatory gaps are becoming increasingly prominent, as evidenced by the collapse of the algorithmic stablecoin UST in 2022, highlighting the need for clear regulations.
As early as 2023, the House Financial Services Committee proposed the STABLE Act, attempting to establish a regulatory framework for stablecoins, but it failed to pass the Senate due to bipartisan disagreements;
On February 4, 2025, Senator Bill Hagerty, along with bipartisan senators such as Kirsten Gillibrand and Cynthia Lummis, officially proposed the GENIUS Act, aiming to balance innovation and regulation. On March 13, the bill passed the Senate Banking Committee with a vote of 18-6, demonstrating strong bipartisan support.
However, the initial full vote on May 8 failed to reach the 60-vote threshold (48-49). Some Democratic senators (such as Elizabeth Warren) expressed concerns that the legislation might benefit Trump family crypto projects (such as USD1 stablecoin), citing potential conflicts of interest.
After revisions, the legislation added restrictions on large tech companies, alleviating some lawmakers' concerns about conflicts of interest. It ultimately passed the procedural vote on May 19 with a vote of 66-32 and is expected to pass a full Senate vote soon with a simple majority.
So, what is the significance of the legislation reaching this point?
First, the market wants certainty. The passage of the legislation essentially marks the transition of the U.S. stablecoin market from 'barbaric growth' to standardization, filling a long-standing regulatory gap and providing certainty for the market.
Secondly, it has made it clear to strengthen the position of the dollar through stablecoins, especially under competitive pressures from China's digital yuan and the EU's MiCA regulations.
Finally, the advancement of the GENIUS Act may pave the way for broader crypto market legislation (such as market structure bills), promoting the integration of the crypto industry with traditional finance, providing the legal basis for the expansion you desire.
Relevant crypto assets
The core provisions of the GENIUS Act directly affect the stablecoin ecosystem and have a ripple effect across the entire crypto market. This regulatory framework will not only reshape the stablecoin industry but also impact multiple crypto sectors such as DeFi, Layer 1 blockchains, and RWA through the widespread use of stablecoins.
However, some projects in the sector do not fully meet the regulatory requirements of the legislation. If the legislation is viewed as a positive, adjustments in product design and business will be necessary.
We have compiled some of the larger projects and summarized the benefits and adjustments as follows.
Centralized stablecoin issuers:
The reserve requirements of the legislation (100% liquid assets, must hold U.S. Treasury bonds) and transparency regulations (such as monthly disclosures) are most favorable for centralized stablecoins. These stablecoins already largely meet the requirements, and clear regulations will attract more institutional funds into the market, expanding their use in trading and payment.
$USDT (Tether):
USDT is the largest stablecoin by market capitalization (with a market cap of about 130 billion USD in 2025), with about 60% of its reserves composed of U.S. short-term Treasury bonds (about 78 billion USD) and 40% in cash and cash equivalents (data source: Tether Q1 2025 transparency report).
The GENIUS Act requires that reserve assets primarily consist of U.S. Treasury bonds. Tether has fully complied with this requirement, and its transparency measures (such as quarterly audits) also meet the requirements of the legislation. However, the key issue is that the use of USDT has always had aspects of a gray industry (such as fraudulent activities), and how to adjust its business to comply with regulations is the next consideration.
$USDC (Circle):
USDC has a market capitalization of about 60 billion USD, with 80% of its reserves composed of short-term U.S. Treasury bonds (about 48 billion USD) and 20% in cash (data source: Circle May 2025 monthly report). Circle is registered in the U.S. and actively cooperating with regulators (such as applying for an IPO in 2024), and its reserves fully comply with the legislation's requirements. The passage of the legislation may make USDC the preferred stablecoin for institutions, especially in the DeFi sector (with USDC's proportion in DeFi reaching 30% in 2025), and its market share is expected to further increase.
Decentralized stablecoins:
$MKR (MakerDAO, issuer of DAI):
DAI is the largest decentralized stablecoin (with a market capitalization of about 9 billion USD), issued through over-collateralization of crypto assets (such as ETH). Currently, about 10% of its reserves are U.S. Treasury bonds (about 900 million USD), mainly collateralized by crypto assets (data source: MakerDAO May 2025 report).
The strict requirements of the GENIUS Act regarding reserve assets may pose challenges for DAI. However, if MakerDAO increases the proportion of U.S. Treasury bond reserves, it may benefit from overall market growth. $MKR holders may profit from the increased use of DAI (with MakerDAO's annual revenue projected at about 200 million USD in 2025).
$FXS (Frax Finance, issuer of FRAX):
RAX has a market capitalization of about 2 billion USD, using a partial algorithmic mechanism (50% collateral, 50% algorithm), with about 15% of collateralized assets in U.S. Treasury bonds (about 300 million USD). If Frax adjusts to a fully collateralized model and increases its U.S. Treasury bond ratio, it may benefit from market expansion, but its algorithmic mechanism may face regulatory pressure, as the legislation does not protect algorithmic stablecoins.
$ENA (Ethena Labs, issuer of USDe):
USDe has a market capitalization of about 1.4 billion USD, issued through ETH hedging and yield strategies, with only 5% of reserves in U.S. Treasury bonds (about 70 million USD).
Their strategies may need significant adjustments to comply with the legislation, and if successful, they may benefit from market growth, but there are also risks involved.
DeFi trading/lending
$CRV (Curve Finance):
Curve focuses on stablecoin trading (with a TVL of about 2 billion USD in 2025), and 70% of its liquidity pool consists of stablecoin trading pairs (such as USDT/USDC).
The increase in stablecoin usage driven by the GENIUS Act will directly enhance Curve's trading volume (currently around 300 million USD in daily trading volume). $CRV holders can benefit from trading fees (annual yield of about 5%) and governance rights. If the stablecoin market grows as projected by Citigroup, Curve's TVL may increase by another 20%.
$UNI (Uniswap):
Uniswap is a universal DEX (with a TVL of about 5 billion USD in 2025), and stablecoin trading pairs (such as USDC/ETH) account for 30% of its liquidity. The increased trading activity of stablecoins due to the legislation will indirectly benefit Uniswap, but its degree of benefit is lower than that of Curve (due to a more diversified business). $UNI holders can benefit from trading fees (annualized around 3%).
$AAVE (Aave):
Aave is the largest lending protocol (with a TVL of about 10 billion USD in 2025), and stablecoins (such as USDC, DAI) make up about 40% of its lending pool.
The legislation is expected to attract more users to use stablecoins for lending (such as collateralizing USDC to borrow ETH). Aave's deposit and borrowing volume may further increase (based on current trends). $AAVE holders will benefit from protocol revenue (with an annual revenue of about 150 million USD in 2025) and token value appreciation.
$COMP (Compound):
Compound has a TVL of about 3 billion USD, with stablecoin lending accounting for about 35%. Similar to Aave, an increase in stablecoin lending will benefit Compound, but its market share and innovation speed are lower than Aave, so the potential upside for $COMP may be relatively small.
Yield protocols
$PENDLE (Pendle):
Pendle focuses on yield tokenization (with a TVL of about 500 million USD in 2025), and stablecoins are commonly used in its yield strategies (such as USDC yield pools, with a current annual yield of about 3%). The market growth driven by the legislation will increase Pendle's yield opportunities (such as yields possibly rising to 5%), and $PENDLE holders may benefit from the growth of protocol revenue (with an annual revenue of about 30 million USD in 2025).
Layer1
$ETH (Ethereum):
Ethereum hosts 90% of stablecoin and DeFi activity (with a DeFi TVL exceeding 100 billion USD in 2025). The increase in stablecoin usage driven by the legislation will boost Ethereum's on-chain transaction volume (current annual revenue from gas fees is about 2 billion USD), and the value of $ETH may rise due to increased demand.
$TRX (Tron):
Tron is an important network for the circulation of stablecoins. Public data shows that the circulation of USDT on the Tron chain is about 60 billion USD in 2025, accounting for 46% of the total USDT supply. The increase in stablecoin usage driven by the legislation may enhance on-chain activity on Tron.
$SOL (Solana):
Solana has become an important platform for stablecoins and DeFi due to its high throughput and low cost (with a TVL of about 8 billion USD in 2025, and an on-chain USDC circulation of about 5 billion USD). The increase in stablecoin usage will drive DeFi activity on Solana (with a current average daily trading volume of about 1 billion USD), and $SOL may benefit from increased on-chain activity.
$SUI (Sui):
Sui is an emerging Layer 1 (with a TVL of about 1 billion USD in 2025) that supports stablecoin-related applications (such as Thala's stablecoin and DEX). The growth of the stablecoin ecosystem driven by the legislation will attract more projects to deploy on Sui, and $SUI may benefit from increased ecosystem activity (currently about 500,000 daily active users).
$APT (Aptos):
Aptos is also an emerging Layer 1 (with a TVL of about 800 million USD in 2025) that supports stablecoin payments. The increase in stablecoin circulation will drive payment and DeFi applications on Aptos, and $APT may benefit from user growth.
Payment sector
$XRP (Ripple):
XRP focuses on cross-border payments (with an average daily trading volume of about 2 billion USD in 2025). Its low-cost and high-efficiency characteristics complement stablecoins. The increased demand for stablecoin cross-border payments driven by the legislation (such as USDC for international settlements) will indirectly enhance XRP's use cases (such as being used as a bridge currency), and $XRP may benefit from increased payment demand.
$XLM (Stellar):
Stellar also focuses on cross-border payments (with an average daily trading volume of about 500 million USD in 2025). It collaborated with IBM to launch the World Wire project, using stablecoins as bridge assets.
Oracles
$LINK + $PYTH:
Oracles provide price data for stablecoins and DeFi. The expansion of the stablecoin market driven by the legislation will increase the demand for real-time price data in DeFi, and the volume of on-chain data calls may grow.
However, this is more of an extension of a favorable logic for sectors rather than a completely strong correlation.
RWA
$ONDO (Ondo Finance):
Focusing on tokenizing fixed-income assets such as U.S. Treasury bonds, its flagship product USDY (Treasury-backed stable yield token) has been issued on chains such as Solana and Ethereum (with a projected circulation of about 500 million USD in 2025). The GENIUS Act requires stablecoin reserves to hold U.S. Treasury bonds, directly benefiting Ondo's Treasury tokenization business. USDY may become one of the preferred reserve assets for stablecoin issuers. Additionally, the increase in stablecoin circulation will drive retail and institutional purchases of USDY through USDC, potentially increasing Ondo's asset tokenization demand, benefiting $ONDO holders.
The dollar, a larger conspiracy
The U.S. promotion of stablecoin legislation can also be seen as a 'sunshine conspiracy'.
On one hand, the U.S. hopes for a weaker dollar policy to increase exports, while on the other hand, it does not want to give up the dollar's status as a global currency.
By supporting the development of stablecoins, the U.S. extends the global influence of the dollar in a digital manner without increasing the Federal Reserve's liabilities—currently, 99% of stablecoins are pegged to the dollar.
At the same time, the regulatory requirement that stablecoins must hold U.S. short-term Treasury bonds as reserves cleverly finds new buyers for Treasury bonds, as evidenced by Tether holding more U.S. Treasury bonds than many developed countries.
This policy not only maintains the dollar's global dominance but also finds reliable buyers for America's massive debt, achieving two goals with one stone.
The passage of the GENIUS Act is undoubtedly a milestone for the crypto market. By binding stablecoins to U.S. Treasury bonds, it provides a new path for the continuation of dollar hegemony while promoting the overall prosperity of the crypto ecosystem.
However, this 'sunshine conspiracy' is also a double-edged sword—while it brings opportunities, its high dependence on U.S. Treasury bonds, potential suppression of DeFi innovation, and uncertainties in global competition may pose future risks.
However, uncertainty is always a stepping stone for the crypto market.
Risks may be uncertain, but participants are all waiting for a certain bull market to arrive.
This article is a collaborative reprint from: Deep Tide
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