The Potential Impact of the Genius Act on the Crypto Assets Industry

The U.S. Senate recently passed the "Guidance and Establishment of the U.S. Stablecoin National Innovation Act," which is the first comprehensive federal regulatory framework for stablecoins. The bill has now been submitted to the House of Representatives, where the House Financial Services Committee is preparing its own text for negotiation. If all goes well, the bill could become law before this autumn, which will significantly reshape the Crypto Assets industry landscape.

The strict reserve requirements of the bill and the national licensing system will determine which blockchains are favored, which projects become important, and which tokens are used, thereby affecting the direction of the next wave of liquidity. Let’s delve into the three major impacts the bill would have on the industry if it becomes law.

1. Payment-type alternative tokens may face challenges

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 securities, or overnight repurchase agreements. Issuers with a circulation exceeding $50 billion will need to undergo annual audits. This stands in stark contrast to the current system, which has almost no substantive guarantees or reserve requirements.

Stablecoins have become the main medium of exchange on the blockchain. In 2024, stablecoins account for approximately 60% of the value of Crypto Assets transfers, processing 1.5 million transactions daily, with most transaction amounts being below $10,000.

For everyday payments, it is clearly more practical to have a stablecoin token that maintains a value of 1 dollar compared to traditional payment alternative tokens that are subject to significant price fluctuations. Once U.S. licensed stablecoins can be legally circulated across state lines, merchants that still accept volatile tokens will find it difficult to justify the additional risks. In the coming years, the practicality and investment value of these alternative tokens may decline sharply 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 dollar-pegged payment channels over payment-type alternative Tokens.

2. The new compliance rules may reshape the competitive landscape

The new regulations will not only provide legitimacy for stablecoins; if the bill becomes law, it will ultimately effectively guide these stablecoins to blockchains that can meet auditing and risk management requirements.

A certain blockchain platform currently holds approximately $130.3 billion in stablecoins, far exceeding any competitors. Its mature decentralized finance ( DeFi ) ecosystem means that issuers can easily access lending pools, collateral lock-up mechanisms, and analytical tools. In addition, they can also piece together a set of regulatory compliance modules and best practices to attempt to meet regulatory requirements.

On the other hand, a certain ledger is positioned as a compliance-first Tokenized currency platform, including stablecoins. In the past month, fully supported stablecoin Tokens have been launched on this ledger, each Token equipped with account freezing, blacklisting, and identity screening tools. These features align closely with the requirements of the Senate bill, which mandates that issuers maintain robust redemption and anti-money laundering control measures.

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 broadly compliant. Different platforms have their own strengths in terms of technical implementation and control, while blockchains that focus on privacy or speed may require expensive modifications to meet the same requirements.

3. Reserve rules may bring institutional capital inflow to the blockchain

Since every dollar stablecoin must hold a reserve of cash-equivalent assets, this legislation quietly ties the liquidity of Crypto Assets to U.S. short-term debt.

The stablecoin market size has 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 the returns to support redemptions or customer rewards.

For blockchain, this connection has two aspects of significance. First, the increased demand for reserves means that more corporate balance sheets will hold government bonds while also holding native tokens to pay network fees, thereby driving organic demand for certain blockchain tokens. Second, the interest income from stablecoins could fund incentives for aggressive users. If issuers return part of the government bond earnings to holders, using stablecoins instead of credit cards may become a rational choice for some investors, thereby accelerating on-chain payment volume and fee throughput.

If the House retains the reserve clause, investors should also expect an increase in currency sensitivity. If regulators adjust collateral eligibility or the Federal Reserve changes the supply of government bonds, the growth of stablecoins and the liquidity of Crypto Assets will fluctuate in sync.

This is a noteworthy risk, but it also indicates that digital assets are gradually integrating into mainstream capital markets, rather than existing independently from them.