The GENIUS Act and Its Impact on Stablecoin Supply
The GENIUS Act, enacted on July 18, 2025, has significantly influenced the yield-bearing stablecoins market. This legislation bans direct yield offerings by issuers, prompting a shift in how investors use stablecoins such as Ethena USDe (USDe) and Sky’s USDS (USDS).
Market Response to Regulatory Changes
Following the Act’s implementation, the supply of yield-bearing stablecoins has grown remarkably:
- USDe’s circulating supply increased by 70% to 9.49 billion.
- USDS saw a 23% rise, reaching nearly 4.81 billion.
This growth reflects the market’s quick adaptation to new regulations, with investors exploring alternative ways to generate yields.
Impact on Governance Tokens
The Act has also affected the value of ENA, Ethena’s governance token, which jumped nearly 60% since mid-July. This demonstrates the close link between stablecoin supply and governance token prices in the DeFi ecosystem.
Understanding the GENIUS Act’s Regulatory Framework
The GENIUS Act sets forth a comprehensive regulatory approach for stablecoins, including:
- Requiring federal licenses for issuers.
- Ensuring one-to-one asset backing.
- Mandating independent reserve audits.
These measures are designed to enhance trust among institutional investors and stabilize the digital currency market.
Community Perspectives
The prohibition on yield-bearing stablecoins has sparked debate. Critics worry it may limit DeFi platform functionality, while supporters argue it promotes market stability and protects consumers.
Looking Ahead: The Future of Stablecoins
The GENIUS Act is expected to propel the stablecoin industry toward a $300 billion supply by the end of 2025, underscoring their expanding role in global finance and international transactions.
Navigating Challenges and Seizing Opportunities
Despite regulatory challenges, yield-bearing stablecoins like USDe and USDS remain attractive, offering APYs of 10.86% and 4.75%, respectively. These figures highlight their potential as sources of passive income in the crypto market.
As the digital economy grows, stablecoins are increasingly seen as vital connectors between traditional and digital finance, evolving through regulatory adjustments, technological progress, and changing investor preferences.
