The sentiment in the encryption market is once again focused on regulatory actions.

On May 19, the U.S. Senate passed the GENIUS Act (“2025 U.S. Stablecoin Innovation and Establishment Act”) with a procedural vote of 66-32, marking a milestone progress towards the imminent establishment of the U.S. stablecoin regulatory framework.

As the first comprehensive U.S. federal stablecoin regulatory bill, the rapid advancement of the GENIUS Act has sparked enthusiastic reactions in the encryption market, with DeFi and RWA sectors related to stablecoins leading today’s market.

Will the GENIUS Act become a catalyst for a new round of bull market?

According to Citibank’s forecast, by 2030, the global stablecoin market is expected to reach $1.6 trillion to $3.7 trillion, and the passage of the bill has provided more qualitative compliance and development space for stablecoins, giving traditional companies more reasonable justification for entering the market.

The market is also looking forward to the entry of incremental funds bringing a “flood irrigation” effect, injecting new liquidity into related encryption assets.

But before that, you should at least understand what this bill entails and the legislative motives behind it in order to provide more compelling reasons for selecting relevant encryption assets.

From “barbaric growth” to standardization

The GENIUS Act literally translates to “Genius Act,” but in reality, it is an abbreviation for the “Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025.”

In simpler terms, it is a legislative document of the United States.

The market is paying attention because it is the first comprehensive federal regulatory bill for stablecoins in American history. Prior to this, stablecoins and encryption currencies had always been in a delicate gray area:

What is not expressly prohibited by law is permissible, but the law does not provide clear rules on “how to do it.”

The goal of the GENIUS Act is to provide legitimacy and security for the stablecoin market through a clear regulatory framework, while reinforcing the dominance of the dollar in digital finance.

In summary, the key contents of the bill include:

• Reserve requirements: Stablecoin issuers must have 100% reserve backing, with reserve assets being high liquidity assets such as US dollars and short-term US Treasury bonds, and must publicly disclose the composition of reserves monthly.
• Regulatory classification: Large issuers with a market value of over $10 billion (such as Tether and Circle) are subject to direct regulation by the Federal Reserve System or the Office of the Comptroller of the Currency (OCC), while small issuers may be regulated by the states.
• Transparency and Compliance: Prohibit misleading marketing (such as claiming that stablecoins are guaranteed by the U.S. government) and require issuers to comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. Issuers with a market capitalization exceeding $50 billion must have annual audits of financial statements to ensure transparency.

This means that the United States actually has a friendly attitude towards stablecoins, provided that the stablecoins are backed by US dollars and meet the requirements for transparency.

Looking back at history, the birth of the GENIUS Act was not an overnight success, but rather the culmination of years of exploration into stablecoin regulation in the United States. We have also quickly outlined the full timeline of this bill to help you quickly understand the background and motivation of the legislation:

The stablecoin market is rapidly developing, but the risks caused by a lack of regulation are becoming increasingly prominent, such as the collapse of the algorithmic stablecoin UST in 2022, highlighting the need for clear regulation.

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 in the Senate due to bipartisan disagreements.

On February 4, 2025, Senator Bill Hagerty, along with bipartisan members Kirsten Gillibrand and Cynthia Lummis, officially proposed the GENIUS Act, aimed at balancing 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 first full vote on May 8 failed to reach the 60-vote threshold (48-49), with some Democratic lawmakers (such as Elizabeth Warren) concerned that the bill could benefit Trump’s family’s encryption projects (such as the USD1 stablecoin), believing there is a conflict of interest.

After revisions, the bill added restrictions on large tech companies, alleviating some lawmakers’ concerns about conflicts of interest, and ultimately passed a procedural vote on May 19 with a vote of 66-32, and is expected to soon pass a full Senate vote with a simple majority.

So, what is the significance of the legislation reaching this point?

First of all, the market wants certainty. The passage of the bill essentially marks the transition of the US stablecoin market from “wild growth” to regulation, filling a long-standing regulatory gap and providing certainty for the market.

Secondly, it is clear that stablecoins need to strengthen the position of the US dollar, especially under the competitive pressure of China’s digital yuan and the EU MiCA regulations.

Finally, the advancement of the GENIUS Act may pave the way for broader encryption market legislation (such as the market structure bill), promoting the integration of the encryption industry with traditional finance, providing the legal basis for the breakout you desire.

Stakeholder-related encryption assets

The core provisions of the GENIUS Act directly impact the stablecoin ecosystem and, through a ripple effect, affect the entire encryption market. This regulatory framework will not only reshape the stablecoin industry but also influence multiple encryption sectors such as DeFi, Layer 1 blockchains, and RWA through the widespread adoption of stablecoins.

However, some projects in certain sectors do not fully meet the regulatory requirements of the legislation. If the legislation is to be viewed as a positive development, then corresponding adjustments need to be made in product design and business operations.

We have compiled a list of some larger projects and summarized the benefits and adjustments as follows.

• Centralized stablecoin issuers:

The reserve requirements of the bill (100% liquid assets, must hold U.S. Treasury bonds) and transparency regulations (such as monthly disclosures) are most beneficial for centralized stablecoins. These stablecoins have basically met the requirements, and clear regulation will attract more institutional funds, expanding their use in trading and payment sectors.

$USDT (Tether): USDT is the largest stablecoin by market capitalization (approximately $130 billion in 2025), with about 60% of its reserves composed of U.S. short-term government bonds (approximately $78 billion) and 40% in cash and cash equivalents (Data source: Tether Q1 2025 Transparency Report).

The GENIUS Act requires reserve assets to be primarily U.S. Treasury securities, and Tether has fully complied, with its transparency measures (such as quarterly audits) also meeting the requirements of the act. However, the focus is on the fact that the use of USDT has always had elements of a grey industry (such as telecom fraud), and how to adjust the business to adapt to regulation is the next issue that needs to be considered.

$USDC (Circle): The market capitalization of USDC is approximately $60 billion, with 80% of its reserves in short-term U.S. Treasury bonds (about $48 billion) and 20% in cash (data source: Circle May 2025 Monthly Report). Circle is registered in the United States and actively cooperates with regulators (such as applying for an IPO in 2024), and its reserves fully comply with legal requirements. The passage of the bill could make USDC the preferred stablecoin for institutions, especially in the DeFi space (by 2025, USDC’s share in DeFi has reached 30%), and its market share is expected to further increase.

• Decentralized stablecoin:

$MKR (MakerDAO, issues DAI): DAI is the largest decentralized stablecoin (market cap of about $9 billion), issued through over-collateralized encryption assets (such as ETH). Currently, about 10% of the reserves are U.S. Treasury bonds (around $900 million), mainly collateralized by encryption assets (data source: MakerDAO May 2025 report).

The strict requirements of the GENIUS Act for reserve assets may pose challenges to DAI, but if MakerDAO increases the ratio of US Treasury reserves, it could benefit from the overall market growth. $MKR holders may profit from the increased usage of DAI (MakerDAO’s annual revenue is approximately $200 million in 2025).

$FXS (Frax Finance, issuing FRAX): The market capitalization of FRAX is approximately $2 billion, using a partial algorithmic mechanism (50% collateralized, 50% algorithmic), with about 15% of the collateral assets being U.S. Treasuries (approximately $300 million). If Frax adjusts to a fully collateralized model and increases the proportion of U.S. Treasuries, it could benefit from market expansion, but its algorithmic mechanism may face regulatory pressure since the legislation does not protect algorithmic stablecoins.

$ENA (Ethena Labs, issuing USDe): The market value of USDe is approximately $1.4 billion, issued through ETH hedging and yield strategies, with only 5% of the reserves in US Treasuries (around $70 million).

Its strategy may need to be significantly adjusted to comply with the requirements of the legislation; if successful, it could 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 in 2025), and 70% of its liquidity pools consist of stablecoin trading pairs (such as USDT/USDC).

The increase in the usage of stablecoins driven by the GENIUS Act will directly boost Curve’s trading volume (currently around $300 million daily). $CRV holders can benefit from trading fees (annual yield of about 5%) and governance rights. If the stablecoin market grows as predicted by Citibank, Curve’s TVL could increase by another 20%.

$UNI (Uniswap): Uniswap is a universal DEX (with a projected TVL of about $5 billion in 2025), and stablecoin trading pairs (such as USDC/ETH) account for 30% of its liquidity. The increase in stablecoin trading activity brought about by the legislation will indirectly benefit Uniswap, but its benefit will be lower than that of Curve (due to a more diversified business). $UNI holders can profit through trading fees (annualized around 3%).

$AAVE (Aave): Aave is the largest lending protocol (with a TVL of approximately $10 billion in 2025), stablecoins (such as USDC and DAI) account for about 40% of its lending pool.

The passage of the bill will attract more users to use stablecoins for lending (such as mortgaging USDC to borrow ETH), and Aave’s deposit and borrowing volume may further increase (based on current trends). $AAVE holders benefit from protocol revenue (approximately $150 million annual revenue by 2025) and the appreciation of token value.

$COMP (Compound): Compound’s TVL is approximately $3 billion, with stablecoin lending accounting for about 35%. Similar to Aave, an increase in stablecoin lending will benefit Compound; however, its market share and innovation speed are lower than Aave, so the potential upside for $COMP may be relatively small.

• Yield Protocol

$PENDLE (Pendle): Pendle focuses on yield tokenization (with an estimated TVL of around $500 million by 2025), and stablecoins are commonly used in its yield strategies (such as the USDC yield pool, which currently has an annual yield of approximately 3%). The growth of the stablecoin market driven by legislation will increase Pendle’s yield opportunities (for example, yields may rise to 5%), and $PENDLE holders may benefit from the growth in protocol revenue (with an estimated annual revenue of around $30 million by 2025).

• Layer1

$ETH (Ethereum): Ethereum supports 90% of stablecoin and DeFi activities (DeFi TVL exceeding $100 billion by 2025). The increase in stablecoin usage driven by legislation will boost on-chain transaction volume on Ethereum (current Gas fees annual revenue about $2 billion), 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 by 2025, the circulation of USDT on the Tron chain is expected to be about $60 billion, accounting for 46% of the total USDT supply; the increase in the use of stablecoins driven by legislation may enhance on-chain activities for Tron.

$SOL (Solana): Solana has become an important platform for stablecoins and DeFi due to its high throughput and low costs (with a projected TVL of about $8 billion in 2025 and an on-chain USDC circulation of about $5 billion). The increased usage of stablecoins will drive DeFi activity on Solana (currently with an average daily trading volume of about $1 billion), and $SOL may benefit from the increased on-chain activity.

$SUI (Sui): Sui is an emerging Layer 1 (with an estimated TVL of about $1 billion in 2025) that supports stablecoin-related applications (such as Thala’s stablecoin and DEX). The growth of the stablecoin ecosystem driven by legislation will attract more projects to deploy on Sui, and $SUI may benefit from the increased ecosystem activity (with approximately 500,000 daily active users currently).

$APT (Aptos): Aptos is also an emerging Layer 1 (with an estimated TVL of around $800 million in 2025), and its ecosystem supports stablecoin payments. The increase in stablecoin circulation will promote Aptos’ payment and DeFi applications, and $APT may benefit from user growth.

• payment track

$XRP (Ripple): XRP focuses on cross-border payments (with an average daily transaction volume of approximately $2 billion in 2025), and its low-cost and high-efficiency characteristics can complement stablecoins. The increase in demand for stablecoin cross-border payments driven by legislation (such as USDC for international settlement) will indirectly enhance the use cases of XRP (such as being used as a bridge currency), and $XRP may benefit from the growth in payment demand.

$XLM (Stellar): Stellar also focuses on cross-border payments (with an average daily transaction volume of about $500 million in 2025) and has collaborated with IBM to launch the World Wire project, using stablecoin as a bridge asset.

• oracle

$LINK + $PYTH: Oracles provide price data for stablecoins and DeFi, and the expansion of the stablecoin market driven by legislation will increase DeFi’s demand for real-time price data, potentially leading to an increase in on-chain data calls.

But this is more like an extension of a sectoral positive logic, rather than a complete strong correlation.

• RWA

$ONDO (Ondo Finance): Focused on tokenizing fixed income assets such as U.S. Treasuries, its flagship product USDY (U.S. Treasury-backed stable yield token) has been issued on chains like Solana and Ethereum (with an estimated circulation of about $500 million in 2025). The GENIUS Act requires stablecoin reserves to hold U.S. Treasuries, directly benefiting Ondo’s U.S. Treasury tokenization business, and USDY may become one of the preferred reserve assets for stablecoin issuers. Additionally, the increase in stablecoin circulation will drive retail and institutional investors to purchase USDY via USDC, potentially increasing the demand for Ondo’s asset tokenization, benefiting $ONDO holders.

Dollar, greater conspiracy

The U.S. is promoting stablecoin legislation, which can also be considered a kind of “open scheme.”

On one hand, the United States 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 the global currency.

By supporting the development of stablecoins, the United States has digitally extended the global influence of the dollar without increasing the liabilities of the Federal Reserve—currently, 99% of stablecoins are pegged to the dollar.

At the same time, the regulatory requirements that stablecoins must hold U.S. short-term Treasury bonds as reserves have cleverly found new buyers for U.S. debt, just as the amount of U.S. Treasury bonds held by Tether has already surpassed that of many developed countries.

This policy not only maintains the global dominance of the US dollar but also finds reliable buyers for America’s massive debt, achieving two goals with one action.

The passage of the GENIUS Act is undoubtedly a milestone for the encryption market. By binding stablecoins to U.S. Treasury bonds, it provides a new path for the continuation of U.S. dollar hegemony while promoting the overall prosperity of the encryption ecosystem.

However, this “overt conspiracy” is also a double-edged sword—while it brings opportunities, its high dependence on U.S. debt, potential suppression of DeFi innovation, and uncertainties of global competition may all become hidden dangers in the future.

However, uncertainty is always the ladder for the encryption market to move forward.

Risks may be uncertain, but participants are all waiting for a certain bull market to arrive.

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