With the implementation of the GENIUS Act, how should we treat the stablecoin narrative with caution?

Written by: imToken

Early this morning Beijing time, the U.S. House of Representatives passed three encryption-related legislations, the CLARITY Act, the GENIUS Act, and the Anti-CBDC Surveillance State Act. Among them, the GENIUS Act is expected to be signed into law by Trump on Friday local time.

This not only marks the first time that the United States has established a national regulatory framework for stablecoins, but also sends a clear signal that stablecoins are moving out of the gray area and into the fringe of the mainstream financial system. At the same time, major financial centers such as Hong Kong, China and the European Union are also accelerating their pace, and the global stablecoin landscape is ushering in a round of reshaping.

Looking back over the past few months, we can see that stablecoins have almost overnight gone from being a financial variable under regulatory scrutiny to a new infrastructure recognized by the government. What happened behind this? Who is pushing stablecoins to become the new protagonist on the global financial stage? How should we rationally understand this round of craze?

From Web3 narrative to national strategy, who is driving it?

Since the beginning of the year, stablecoins have undoubtedly become the focus of global financial policies and narratives.

But this craze is not accidental, nor is it the product of the natural evolution of technology. Rather, it is a structural shift driven by policy forces, especially the policy shift in the Trump era, which played a "catfish role" with a very stirring effect.

On the one hand, Trump has always been strongly opposed to central bank digital currencies (CBDCs) and has clearly expressed his support for the market-driven digital dollar route; on the other hand, from endorsing the USD1 launched by his family business to promoting and signing the GENIUS Act, Trump is also personally fulfilling his campaign promise to loosen restrictions on the crypto market.

This series of signals has also directly forced global regulators to re-examine stablecoins. Therefore, in just a few months, stablecoins have jumped from a marginal issue in the crypto circle to a focus of discussion at the national strategic level. In addition to Hong Kong, China, which has finalized the implementation timetable for the Stablecoin Ordinance, major economies around the world have begun to seriously consider and accelerate the establishment of a clear compliance framework for stablecoins:

• The EU's MiCA Regulation (Markets in Crypto-Assets), which came into effect in 2024, has fully covered the compliance supervision of crypto assets and has made detailed classifications of stablecoins;
• The ruling party of South Korea's new president Lee Jae-myung has proposed the "Basic Law on Digital Assets", which clearly stipulates that as long as a South Korean company has a share capital of at least 500 million won (about 370,000 US dollars) and ensures that refunds are guaranteed through reserves, it can issue stablecoins;

Objectively speaking, the passage of the GENIUS Act is not only a loosening of the United States' control over stablecoins, but also a clear choice of the digital dollar route - abandoning the central bank digital currency (CBDC) and supporting compliant US dollar stablecoins issued by the private sector.

It can be foreseen that this statement by the United States will become a reference paradigm for regulatory design in other countries, and will promote stablecoins into the common discussion framework of global financial policies.

The path of stablecoins is changing

In the past few years, the stablecoin market has been dominated by Tether (USDT) and Circle (USDC), which represent the two paths of "circulation efficiency" and "compliance and transparency" respectively:

• USDT focuses on cross-platform circulation and matching efficiency, and dominates exchanges and gray settlement networks;
• USDC emphasizes asset compliance and transparency, and focuses on regulatory-friendly scenarios and institutional client systems.

From the perspective of overall scale, stablecoins have continued to grow since 2025. According to Coingecko data, as of July 18, the total market value of stablecoins across the entire network was approximately US$262 billion, an increase of more than 20% from the beginning of the year.

This also means that in the process of the crypto market recovery, stablecoins are still the most core "liquidity entrance", among which the duopoly of USDT and USDC remains solid - the total market value of USDT exceeds 160 billion US dollars, accounting for more than 60%; USDC remains at around 65 billion US dollars, accounting for about 25%, and the combined share of the two is nearly 90%.

Since 2024, more and more Web2 financial companies and traditional capital forces have begun to enter the market and use stablecoins to build on-chain settlement tools. For example, PayPal's PYUSD and USD1, which is supported by new political capital, are two representative signals:

PYUSD (PayPal USD) was launched by payment giant PayPal, and naturally has cross-border settlement scenarios and a global merchant network; USD1 aims to enable compliant deposits and withdrawals and cross-border business on the chain, and has obtained support from political and business resources endorsed by Trump, entering into corporate settlement scenarios.

It can be said that with the support of institutional and national forces, these emerging stablecoin projects are pushing the function of stablecoins from "Web3 liquidity tools" to a value bridge connecting Web3 and the real economic system. Its usage scenarios are also gradually penetrating from exchanges and wallets into supply chain finance, cross-border trade, freelancer settlement, OTC scenarios and other diversified uses.

Behind the surge, what are the real challenges of stablecoins?

However, objectively speaking, the GENIUS Act has certainly given stablecoins institutional recognition, but it has also brought more compliance requirements and set clearer regulatory boundaries for their development.

For example, the issuer must accept KYC/AML management, funds must be custodial, isolated and audited by a third party, and in extreme cases, issuance quotas or usage restrictions may be set. This means that stablecoins have obtained legal status, but have also officially entered the "regulated currency role."

From this perspective, whether subsequent stablecoins can break through the label application restrictions of Web3 is the key to whether they can achieve incremental implementation. After all, looking further, the greatest growth potential of stablecoins lies not in the internal circle of Crypto, but in the broader Web2 and the global real economy.

Just like the main increase in USDT and USDC no longer comes from on-chain interacting users, but from small and medium-sized enterprises and individual merchants with strong demand for cross-border settlement, emerging markets and financially disadvantaged regions that cannot access the SWIFT network, residents of inflationary countries who are eager to get rid of fluctuations in their own currencies, content creators and freelancers who cannot use PayPal and Stripe, etc.

In other words, its biggest growth in the future will not be in Web3, but in Web2 - the real killer application of stablecoin is not "the next DeFi protocol" but "replacing traditional US dollar accounts."

This also means that once stablecoins become the basic carrier of the digital dollar in the world, it will inevitably affect sensitive issues such as monetary sovereignty, financial sanctions and geopolitical order.

Therefore, the next stage of growth of stablecoins will inevitably be closely related to the new globalization of the US dollar, and will also become a new battlefield between governments, international institutions and financial giants.

Last words

The essence of currency issuance has always been an extension of power. It relies not only on asset reserves and settlement efficiency, but also on the endorsement of national credit, regulatory approval and international status.

Stablecoins are no exception. If they want to truly penetrate from the Crypto world into the real economic system, relying solely on market mechanisms or business logic is not enough. Therefore, the compliance support brought about by the global policy shift in 2025 will certainly be an important driving force for stablecoins to become mainstream, but it also means that they will have to survive in a more complex game.

This is a long-term game, and we are just at the beginning of it.