GENIUS Act Passed: New Era of Stablecoin Regulation Begins, Crypto Market Welcomes a Turning Point

On May 19, 2025, the U.S. Senate passed the procedural vote for the "2025 U.S. Stablecoin Innovation and Establishment Act" (GENIUS Act) with a vote of 66-32, marking the imminent establishment of the first comprehensive federal stablecoin regulatory framework in the United States. This milestone event quickly ignited enthusiasm in the crypto market, with zones related to stablecoins, DeFi, and RWA (Real World Assets) leading the market, and there is a widespread belief that this could become a catalyst for a new bull run. This article will analyze the core content of the act, the benefiting assets, and the strategic intentions behind it.

From "barbaric growth" to standardization: the core content of the GENIUS Act

The GENIUS Act is the first comprehensive federal regulatory framework for stablecoins in the United States, aimed at addressing the long-standing issue of stablecoins being in a "gray area." Its core content includes:

Reserve requirements:

The issuer of stablecoins must hold 100% high liquidity assets (such as US dollars, short-term US Treasury bonds) as reserves and publicly disclose the reserve composition every month. This regulation directly excludes algorithmic stablecoins and non-USD pegged assets, reinforcing the dominant position of the US dollar in the stablecoin ecosystem.

Tiered Regulation:

Issuers with a market cap exceeding $10 billion (such as Tether and Circle) must accept direct regulation from federal agencies (such as the Federal Reserve or the Office of the Comptroller of the Currency);

Small issuers can be regulated by state-level agencies, but must comply with federal standards.

Transparency and Compliance:

Prohibition of misleading advertising (such as implying government backing from the United States)

Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations is required.

Issuers with a market capitalization exceeding $50 billion must undergo an annual audit.

Legislative motivation:

The push for the legislation stems from the lessons learned from the collapse of the algorithmic stablecoin UST in 2022, as well as the competitive pressures from the EU's MiCA regulations and China's digital yuan. By regulating the stablecoin market, the United States aims to solidify the dominance of the dollar while paving the way for traditional financial institutions to enter the encryption space.

Which crypto assets will benefit?

The passing of the GENIUS bill directly affects the stablecoin ecosystem and has a ripple effect on DeFi, Layer 1 public chains, and the RWA sector. The following are the key beneficiary directions:

Centralized stablecoin:

USDC (Circle):

80% of the reserves are in U.S. bonds, fully compliant with the requirements of the act, and have been registered in the United States and are actively compliant, expected to become the institutional preferred stablecoin.

USDT (Tether):

Although 60% of the reserves are in US Treasury bonds, its offshore operating model may face regulatory pressure. If Tether chooses to adjust for compliance, it can still retain market share.

Decentralized stablecoin and Decentralized Finance:

DAI (MakerDAO):

The proportion of US Treasury reserves needs to be increased to comply with regulations, but if the adjustment is successful, it will benefit from market expansion.

Curve (CRV):

The trading volume of stablecoins accounts for 70% of its liquidity, and the growth in trading volume driven by the legislation will directly enhance the protocol's revenue.

Aave (AAVE):

The rising demand for stablecoin lending may push its TVL (Total Value Locked) to exceed 10 billion USD.

Layer 1 public chain:

Ethereum (ETH):

Carrying 90% of the stablecoin and Decentralized Finance activities, on-chain transaction volume and Gas fees may further increase.

Tron (TRX):

The on-chain USDT circulation ratio accounts for 46%, and the increase in stablecoin usage will boost its network activity.

Solana (SOL):

The low cost and high throughput characteristics attract stablecoin projects, with the on-chain USDC circulation reaching $5 billion.

RWA (Real World Assets):

Ondo Finance (ONDO):

The US debt tokenization project USDY may become the preferred reserve asset for stablecoin issuers, directly benefiting from the demand for US debt due to the legislation.

The "sunny strategy" of US dollar hegemony: the binding of stablecoins and US treasury bonds

The GENIUS Act is not only a regulatory breakthrough in the crypto market, but also an important part of the dollar strategy:

1. Extend the influence of the US dollar:

99% of stablecoins globally are pegged to the US dollar, and the passage of the bill will further expand the use cases of the US dollar in digital finance.

New buyers of US Treasuries:

It is mandatory to require stablecoin reserves to hold US Treasury bonds, injecting long-term demand into the US Treasury bond market. Taking Tether as an example, its holdings of US Treasury bonds have already surpassed those of several developed countries.

Avoiding the Federal Reserve's liabilities:

By issuing stablecoins through private institutions, the United States can expand dollar liquidity without directly increasing the money supply.

Risks and Challenges

Although the bill brings certainty to the market, there are also potential issues:

Decentralized innovation is restricted:

Algorithmic stablecoins and non-USD debt collateral projects may be marginalized, suppressing Decentralized Finance diversity.

Regulatory arbitrage risk:

If offshore stablecoins (such as USDT) refuse compliance, it may lead to market fragmentation.

Systemic risk:

The fluctuation in U.S. Treasury prices may affect the stability of stablecoins, and we need to be wary of a repeat of a "Silicon Valley Bank" style bank run.

Summary: The future of encryption under the wave of compliance.

The passage of the GENIUS Act marks the transition of the crypto industry from "barbaric growth" to a compliant era. In the short term, the market may attract institutional funds due to clear regulations; in the long term, it will be necessary to balance the conflict between innovation and regulation. For investors, focusing on compliant stablecoins (such as USDC), infrastructure (such as Curve), and the RWA sector (such as Ondo) will be key. Meanwhile, the strategy of consolidating dominance through stablecoins, particularly the US dollar, brings both opportunities and the hidden danger of dependency on US Treasuries. The next explosion in the crypto world may very well begin with this "compliance revolution."