Author: Alex Carchidi
Translated by: Blockchain in Plain Language
On June 17, the U.S. Senate passed the Guiding and Establishing American Stablecoin National Innovation Act (Genius Act), the first comprehensive federal stablecoin regulatory framework that has overcome the biggest obstacle.
The bill has now been submitted to the House of Representatives, where the Financial Services Committee is preparing its own text for consultation and possible voting in late summer. If all goes well, the bill could be signed into law before autumn, potentially greatly reshaping the cryptocurrency industry landscape.
The bill's strict reserve requirements and nationwide licensing system will determine which blockchains are favored, which projects become important, and which Tokens are used, thereby influencing the direction of the next wave of liquidity. Let's explore the three major impacts the bill could have on the industry if it becomes law.
1. Payment-type Alternative Tokens May Disappear Overnight
The Senate bill will create a new "licensed payment stablecoin issuer" license and require each Token to be backed 1:1 by cash, U.S. Treasury bonds, or overnight repurchase agreements (repos) - with annual audits for issuers with circulation exceeding $50 billion. This is in stark contrast to the current "wild west" system, which has almost no substantial guarantees or reserve requirements.
This clear regulation comes at a time when stablecoins have become the primary transaction medium on the blockchain. In 2024, stablecoins account for about 60% of cryptocurrency transfer value, processing 1.5 million transactions daily, with most transactions under $10,000.
For daily payments, stablecoin Tokens that consistently maintain a $1 value are clearly more practical than most traditional payment-type alternative Tokens, which could fluctuate 5% before lunch.
Once U.S.-licensed stablecoins can legally circulate interstate, merchants still accepting volatile Tokens will find it difficult to justify the additional risk. In the coming years, the utility and investment value of these alternative Tokens may significantly decline unless they can successfully transform.
Even if the Senate bill does not pass in its current form, the trend is already evident. Long-term incentives will clearly favor USD-pegged payment channels over payment-type alternative Tokens.
2. New Compliance Rules May Actually Determine New Winners
The new rules will not only provide legitimacy to stablecoins; if the bill becomes law, it will ultimately effectively guide these stablecoins towards blockchains that can meet audit and risk management requirements.
Ethereum (ETH 1.15%) currently hosts about $130.3 billion in stablecoins, far surpassing any competitor. Its mature DeFi ecosystem means issuers can easily access lending pools, collateral lockers, and analytical tools. Moreover, they can piece together a set of regulatory compliance modules and best practices to attempt to meet regulatory requirements.
In contrast, XRP (XRP 0.22%) Ledger (XRPL) is positioning itself as a compliance-first tokenized monetary platform, including stablecoins.
In the past month, fully supported stablecoin Tokens have been launched on the XRP Ledger, each with built-in account freezing, blacklisting, and identity screening tools. These features are highly aligned with the Senate bill's requirements that issuers maintain robust redemption and anti-money laundering controls.
Ethereum's compliance system might cause issuers to violate these requirements, but it is currently difficult to determine exactly how strict the regulatory requirements will be.
Nevertheless, if the bill becomes law in its current form, large issuers will need real-time verification and plug-and-play "Know Your Customer" (KYC) mechanisms to remain roughly compliant. Ethereum offers flexibility but complex technical implementation, while XRP provides a simplified platform and top-down control.
Currently, these two blockchains seem to have advantages over chains focused on privacy or speed, which may require expensive modifications to meet the same requirements.
3. Reserve Rules May Bring a Flood of Institutional Funds to Blockchains
As each dollar of stablecoin must hold an equivalent cash-like asset reserve, the bill quietly ties cryptocurrency liquidity to U.S. short-term debt.
The stablecoin market has already exceeded $251 billion. If institutions continue to develop along the current path, it could reach $500 billion by 2026. At this scale, stablecoin issuers will become one of the largest buyers of U.S. short-term Treasury bonds, using returns to support redemption or customer rewards.
For blockchains, this connection has two implications. First, the need for more reserves means more corporate balance sheets will hold Treasury bonds while also holding native Tokens to pay network fees, thereby organically driving demand for Tokens like Ethereum and XRP.
Second, stablecoin interest income could fund aggressive user incentives. If issuers return part of their Treasury bond returns to holders, using stablecoins instead of credit cards might become a rational choice for some investors, accelerating on-chain payment volume and fee throughput.
Assuming the House of Representatives retains the reserve provisions, investors should also expect increased monetary sensitivity. If regulators adjust collateral eligibility or the Federal Reserve changes Treasury bond supply, stablecoin growth and cryptocurrency liquidity will fluctuate synchronously.
This is a risk worth noting, but it also indicates that digital assets are gradually integrating into mainstream capital markets rather than existing independently.
