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01 The GENIUS Act at a Glance
Last Friday, President Trump signed the GENIUS Act in the Oval Office, creating the first-ever federal statute governing stablecoins in the United States.
For crypto natives, stablecoins have long been the rails of on-chain finance; now they enjoy explicit, institutional legitimacy in the eyes of U.S. regulators.
In the long arc of the industry, this is crypto’s “ChatGPT moment”—the first product category that is both mainstream-useful and regulatorily unambiguous.
Key provisions of the Act:
Full-reserve backing: Issuers must back every stablecoin 1-for-1 with high-quality, liquid U.S.-dollar assets—cash at insured banks, money-market funds, or short-dated Treasuries. USDT’s current mix (gold, Bitcoin, corporate paper) does not qualify.
Payments-only mandate: Issuers may not pay interest to holders, ensuring that stablecoins function strictly as digital cash. The clause is a strategic concession to banks, buying them time before deeper disruption.
Bankruptcy remoteness: In insolvency, coin holders have first-priority claims on the reserve assets.
Transparency & audits: Monthly reserve attestations and periodic third-party audits are compulsory.
AML/KYC: Issuers must implement full Bank Secrecy Act compliance, including customer verification and suspicious-activity reporting.
Dual-track supervision: The Treasury is the primary federal regulator; state regulators may charter smaller issuers (≤ $10 B).
Eligible issuers: Banks, fintechs, and large retailers may apply; pure-play tech, social-media, or e-commerce giants (e.g., Meta, X, Instagram) are barred.
By wedding the reliability of the dollar to the open rails of public blockchains—while keeping the entire structure under U.S. oversight—the Act paves the way for mass-market adoption of stablecoins across commerce and finance.
02 What It Means for USDC and USDT
Does the law hand Circle an automatic win?
Probably not. Headlines claim that because Tether’s reserves do not yet meet the new standard, USDC will dominate. That misses the Act’s “comparability test”: foreign issuers can continue U.S. operations if their home rules are deemed equivalent. Expect Tether to adapt—fast.
Who wins the U.S. market—USDC or USDT?
A better question: which fintech will be first to weave stablecoins into everyday products? Circle? Tether? Stripe? PayPal?
Competition will drive fees toward zero. The real winners will be the companies layering services on top.
Payroll automation
Programmable money plus stablecoins for payroll and contractor payouts is an enormous, still-nascent market. Milestones and time-locks can trigger automatic disbursements, with the blockchain handling accounting and compliance.
Emerging markets
These are not “race-to-the-bottom” arenas; they are wide-open blue oceans where Tether already reigns. Users don’t demand yield—they demand stability. In Argentina, simply holding USD-pegged coins is an inflation hedge; that is the return.
We expect Tether to keep dominating these markets and to grow even closer to the U.S. government.
03 Every Major Fintech Will Mint Its Own Coin
PayPal has already launched PYUSD; we think Stripe is next.
Block (Square/Cash App), Robinhood, SoFi, Chime, and international players are obvious candidates.
Why?
Massive user bases and global infrastructure.
Strong balance sheets and banking partners.
Stablecoins give merchants 24/7 global settlement at lower cost and create new fee streams (issuers keep the reserve yield under the Act).
04 U.S. Banks: Adapt or Become the Post Office
Banks are in a bind. Tomorrow’s banks may look like crypto-native fintech companies running on stablecoin rails.
Yes, post offices still exist two decades after email went mainstream; slow banks will still exist. But they will feel like post offices.
Why banks struggle
Scale and bureaucracy stifle innovation.
No incentive to cannibalize core business: take deposits, invest deposits, earn the net-interest margin.
Stablecoin reserves cannot be lent out; they are “dead capital.” Banks will eventually issue coins to stay relevant, but they will have to share interest with holders, eroding the old model.
The GENIUS Act merely accelerates that reckoning.
05 The Existential Threat to Visa and Mastercard
Reminder: stablecoins settle globally, peer-to-peer, near-instantly, and for pennies.
Card networks charge 200–300 bps in interchange, FX spreads, and scheme fees—and still take 2–3 days to settle.
Stablecoins are simply a superior product for merchants, e-commerce, remittances, subscriptions, payroll, and cross-border flows.
That is a direct assault on a $200 billion annual fee pool.
How the incumbents are reacting
Multi-rail infrastructure: moving beyond card-only rails to treat stablecoins as “just another settlement currency.”
Value-added services: fraud detection, chargebacks, identity layers.
Stablecoin-branded cards: USDC and PYUSD cards keep Visa/Mastercard relevant on the front end even as they lose control of the rails.
The networks are being forced to pivot from moving value to providing trust and tooling. The savings from lower card fees will flow to merchants, issuers, consumers, and the fintechs that bundle new services around stablecoins.
06 Bullish for Dollar Dominance
Stablecoins are a gift to U.S. dollar hegemony—call it a deus ex crypto.
Tether alone was the fifth-largest buyer of U.S. Treasuries last year; if it were a country, it would rank 18th in Treasury holdings. The story is just beginning.
Global retail demand for U.S. debt
When an overseas user buys USDT as a savings vehicle, Tether buys T-bills.
Thus, Tether decentralizes ownership of U.S. debt away from sovereigns and toward individual users worldwide. The current administration understands this, which is why Treasury nominee Scott Bessent has become an evangelist for the GENIUS Act and for Tether itself.
Expect an ever-closer symbiosis between Tether (and other offshore issuers) and the U.S. government: new buyers, expanded dollar network effects, and financial inclusion for the unbanked—all outside the traditional banking system.
07 Takeaway & Trade Implications
Most stablecoins live on Ethereum, which has already captured the “stablecoin narrative.” Personally, I prefer USDC on Solana for UX, yet only 4.2 % of supply resides there.
ETH/SOL exposure may be the lowest-risk long-term play.
Farther out on the risk curve, two crypto-native issuers stand out: Ethena and Sky.
Ethena offers a high-beta bet: regulatory arbitrage under the Act, yield-sharing, and reflexive demand tied to ETH open-interest growth. (See our recent Ethena deep-dive.)
Bottom line: stablecoin supply is expanding, velocity on-chain is rising, prices are rising, and volatility is rising.
Buckle up.
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