MW New crypto bill could turbocharge the stablecoin industry: 4 changes it might bring

By Frances Yue

The stablecoin industry could reach a $2.5 trillion market cap by 2030, according to one estimate, up from the current $248 billion

New legislation that aims to regulate stablecoins, a type of cryptocurrency whose value is pegged to another asset, is on its way to a vote in the Senate.

Should the bill become law, crypto bulls see potential for it to drive wider adoption of dollar-linked stablecoins, and possibly to strengthen the battered U.S. dollar. Cryptocurrencies also may end up playing a much bigger role in the broader financial system, analysts said.

The bill, called the Guiding and Establishing National Innovation for U.S. Stablecoins Act - or Genius Act - aims to provide a regulatory framework for stablecoins and their issuers. If enacted, it would be the first legislation in the U.S. regulating the $248 billion stablecoin market.

Stablecoins could play a more important role in financial markets down the road because they can serve as a bridge between traditional finance and the $3.3 trillion crypto market, while facilitating trading, borrowing and lending in the crypto ecosystem. Currently, 83% of stablecoins are denominated in U.S. dollars, according to a recent note from Deutsche Bank.

The Genius Act moved through a procedural vote on Monday, allowing Senate Republican leaders to bring the legislation to the floor for a final vote, which could happen as soon as this week.

But the legislation still faces hurdles. The Senate bill, if passed, would need to be reconciled with a version approved by the House Financial Services Committee, and then both chambers of Congress must agree on a single bill before sending a final version to President Donald Trump for his signature.

"There are still a lot of moving pieces," said Jennifer Schulp, director of financial regulation studies at the Cato Institute, a libertarian think tank.

The bill previously faced roadblocks after some Democrats expressed concerns around language that would have allowed big technology companies and elected officials to issue their own stablecoins.

The current bill outlines specific regulators for different stablecoin issuers, details requirements for stablecoin reserves and lists consumer-protection measures, measures that have helped it garner bipartisan support, according to Stephen Gannon, a partner specializing in financial services at law firm Davis Wright Tremaine.

Here are four ways the proposed bill could change the stablecoin market.

More stablecoin issuance

If the Genius Act becomes law, it could greatly lower the regulatory risks for issuers of stablecoins and provide a much clearer path for legal compliance in terms of product design, the Cato Institute's Schulp said in a phone interview.

While there are already hundreds of stablecoin issuers, the market is dominated by two stablecoins: One is known as USDT, which is issued by Tether, and another is USDC, a dollar-backed stablecoin developed by Circle. USDT and USDC account for 61% and 24%, respectively, of the market share in terms of market capitalization, according to data from CoinMarketCap. As of February, Tether was the 21st-largest foreign holder of U.S. Treasurys, after the United Arab Emirates and Germany, according to Deutsche Bank. Meanwhile, Circle filed for an initial public offering last month.

If the Genius Act clears up regulatory uncertainty, more companies that have been on the sidelines are likely to launch their own stablecoins, according to Thomas Cowan, head of tokenization at Galaxy Digital, a crypto financial services firm. He expects stablecoin issuance from traditional payments institutions to pick up if the bill becomes law, given that companies would "have the rules of the road," he said in a phone interview. He also thinks the technology could help more companies transform their back-end systems.

On that front, Bank of America $(BAC.SI)$ Chief Executive Brian Moynihan said in February that the bank was likely to issue a stablecoin once legislation was passed. Fidelity also said its digital-assets arm has been testing a stablecoin.

More tokenized products

Cowan said he also expected to see more tokenized financial assets, such as bonds or equities, being launched in the next 18 months if the Genius Act becomes law. Tokenization refers to the digital representation of assets on a blockchain.

Stablecoins are the "bedrock" of tokenization, as a dollar-backed stablecoin is essentially a tokenized dollar, Cowan said. "If stablecoins are increasingly looked at as a default, we'll see the rest of the industry begin to go up on the risk curve and begin to monetize other financial assets" such as stocks and bonds.

Wall Street heavyweights BlackRock $(BLK)$ and Franklin Templeton launched tokenized money-market funds in 2024 and 2021, respectively.

Wider crypto adoption

If the stablecoin bill gets passed, it could increase the adoption of digital assets in general, noted Gannon at Davis Wright Tremaine. He expects the stablecoin market cap to reach $2 trillion to $2.5 trillion by 2030.

Traders often park their assets in stablecoins instead of fiat currencies when trading crypto to enable faster transactions. Stablecoins also already play a significant role in decentralized finance, supporting crypto lending and borrowing. Decentralized finance refers to financial activities that happen on blockchains and that are executed without middlemen.

As more people adopt stablecoins, there "will be more opportunities to use stablecoins in new or better blockchain-based products - to self custody, make purchases, send money, use DeFi [decentralized finance] and more," Sam Broner, a partner at venture-capital fund a16z crypto, wrote in a recent note.

Support for the dollar

The rise of stablecoins may amplify the dominance of the U.S. dollar, noted Jim Reid, head of global macro and thematic research at Deutsche Bank. The greenback's status as a reliable safe haven was tarnished amid the extreme market volatility earlier this year as Trump aggressively rolled out his tariff agenda.

"Essentially, stablecoin providers are acting like money-market funds supporting U.S. short-term debt markets and driving currently non-USD liquidity holdings into USD," Reid wrote in a recent client note.

If the Genius Act becomes law, people in other countries might have more trust in dollar-denominated stablecoins issued by U.S. companies as a way to gain exposure to the greenback and U.S. Treasurys, because reserves of the coins will be attested, noted Dea Markova, director of policy at crypto infrastructure firm Fireblocks.

Read: The biggest winner from potential stablecoin legislation may be the U.S. dollar. Here's why.

Robert Schroeder contributed.

-Frances Yue

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May 21, 2025 10:43 ET (14:43 GMT)

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