*The new U.S. "GENIUS" Act: A significant leap in the stablecoin market*
The new U.S. "GENIUS" Act led to a significant leap in the stablecoin market worth $4 billion in just seven days, raising the total market cap of stablecoins to over $264 billion. This landmark legislation provides a clear federal framework for banks, asset managers, and institutional investors to issue fiat-backed stablecoins, enhancing regulatory clarity and opening the door for new capital and players in this space.
*Types of stablecoins:*
- *Fiat-backed stablecoins*: Typically pegged 1:1 with the US dollar and backed by cash or short-term assets like US Treasury bonds, making up about 85% of the market. Examples of these coins include USDT and USDC, with a combined market value of over $227 billion.
- *Crypto-backed stablecoins*: Depend on crypto collateral like Ether or tokenized Bitcoin, with a market value of about $4.35 billion. An example of this is DAI from MakerDAO.
- *Algorithmic stablecoins*: Automatically control supply but are prone to collapse, as seen with the Terra project. This category has been marginalized under the new law.
- *Commodity-backed stablecoins*: Backed by gold and considered a hedge against inflation, but their adoption remains limited due to liquidity and custody complexities. An example of this is Pax Gold (PAXG).
*Impact of the law on the market:*
- Since the signing of the GENIUS Act on July 18, the number of banks, institutions, and companies entering the stablecoin market has increased.
- Anchorage Digital launched a stablecoin issuance platform in partnership with Ethena Labs, to offer USDtb within the new regulatory framework.
- Asset management firm WisdomTree launched a stablecoin named USDW backed by the dollar, aimed at enabling tokenized assets that distribute profits.
- Major banks like Bank of America, JPMorgan, and Citigroup are also preparing to enter the stablecoin market.
Thanks to this law, the stablecoin market appears to be undergoing a major shift, with new players entering and a broadening of the regulatory framework. This trend is expected to continue in the future, enhancing stability and innovation in this sector.
