Stablecoin Market Experiences $9 Billion Boost Following Passage of GENIUS Act, US Dollar-Linked Stablecoins USDe and USDT Take the Lead
Boom in Stablecoin Market Following the Passing of the GENIUS Act
The stablecoin market has experienced significant growth in the past few weeks, with key players like PayPal, Ripple, and USDe seeing notable increases in their respective stablecoins. This surge can be attributed to the passage of the GENIUS Act, a comprehensive U.S. federal regulatory framework for payment stablecoins.
Signed into law by President Donald Trump on July 18th, the GENIUS Act establishes a formal regulatory regime for stablecoins, aiming to legitimize and stabilize the U.S. market. The Act mandates that only approved U.S.-based issuers or registered foreign issuers under comparable supervision can issue payment stablecoins and requires 100% reserve backing with low-risk liquid assets like U.S. dollars or short-term Treasuries.
Key predicted implications of the GENIUS Act on the stablecoin market and players such as USDe include:
- Regulatory Clarity and Oversight: Stablecoin issuers must become "permitted payment stablecoin issuers," regulated either as approved bank subsidiaries, federally approved nonbanks, or state-chartered issuers. This framework excludes unapproved issuers from the U.S. market and confines issuance to regulated entities, increasing compliance burdens on leading stablecoins like USDe.
- Reserve Requirements: Issuers must maintain 100% backing of stablecoins with low-risk liquid assets and disclose reserve compositions monthly. This enhances consumer confidence and financial stability by ensuring stablecoins are fully collateralized and transparent.
- Consumer Protections: The Act contains strict marketing rules preventing misleading claims, mandates protection of stablecoin holders’ claims above other creditors during insolvency, and aligns federal and state regulations to ensure consistency.
- Market Access and Competitive Dynamics: After three years, digital asset service providers generally cannot offer or sell stablecoins not authorized under GENIUS, effectively reducing unauthorized stablecoins in the U.S. market and favoring compliance by major players like USDe. The Act also aims to ensure U.S.-licensed issuers maintain competitiveness relative to foreign entities via a clear regulatory regime and tax obligations.
- Broader Industry Impact: By setting the first regulatory precedent in the U.S. for stablecoins, the GENIUS Act is expected to catalyze further crypto regulatory development and potentially boost investor confidence and innovations in digital payments.
In addition to USDe, other stablecoins like Sky's USDS and Ethena's USDe have also seen significant growth since July 18th, with increases of $1.30 billion and $4.19 billion, respectively. The 24-hour volume for PayPal's PYUSD and Ripple's RLUSD has surged by 140% and over 97%, respectively, surpassing $40 million and $40 million in volume.
The GENIUS Act's impact on the stablecoin market is evident, as the market has grown by $9.11 billion in the 23 days since the Act passed, reaching a value of around $276 billion. As the regulatory landscape for stablecoins continues to evolve, it remains to be seen how players like USDe will adapt and navigate the new regulatory environment.
- The GENIUS Act has led to increased interest in trading options for stablecoins like USDe, given the regulatory clarity and oversight it provides to the stablecoin market.
- With the enhancement of consumer confidence and financial stability brought about by the GENIUS Act's reserve requirements, investing in stablecoins such as Sky's USDS and Ethena's USDe could be potentially lucrative in the finance sector.
- The technological advancements in the finance industry, such as the rise of trading platforms for bitcoin options, could see boosts in adoption following the passage of the GENIUS Act, as it increases legitimacy and competitiveness in the stablecoin market.
