New Era of Stablecoins: The "GENIUS Act" Leads the Digital Asset Revolution

2025 is referred to by industry insiders as the "Year of the Stablecoin", with dollar-backed digital assets becoming the focus, even receiving recognition at the highest levels. In March of this year, a DeFi platform launched the world’s first free stablecoin USD1. In May, a senior government official spoke at a Bitcoin conference, clarifying the government's positive stance on stablecoins, believing they could become a "force multiplier for American economic strength".

Subsequently, a stablecoin issuer completed a $20 billion IPO, triggering what is referred to in the industry as the "Summer of Stablecoins." Last week, the "GENIUS Act" was officially signed into law, becoming the first piece of legislation in the U.S. to directly regulate digital assets, marking a turning point for global finance.

Even the CEO of a major bank who personally harbors doubts about cryptocurrencies has joined this initiative. Although he has publicly stated that he does not understand the appeal of cryptocurrencies, there has long been a gap between his words and actions: this largest bank in the United States has been a pioneer in blockchain technology and has been developing its own stablecoin since 2019.

Introduction to the GEN Act

The full name of the "GENIUS Act" is "2025 American Stablecoin Innovation Guidance and Establishment Act", which is the first federal law in the United States to comprehensively regulate "payment stablecoins". The act establishes a long-awaited licensing and regulatory framework for stablecoin issuers, requiring that stablecoins be backed by a 1:1 reserve, implementing strict consumer protection measures, and laying a clear legal foundation for the integration of stablecoins into the mainstream financial system.

The law also prohibits non-financial enterprises from issuing stablecoins without special approval, imposing severe penalties for violations. Offenders may face fines of up to $200,000 per day, and criminal penalties include up to 5 years in prison.

The Importance of the GEN Act

The founder of a rapidly growing crypto investment fund shared his views: "The GENIUS Act is not only a significant advancement in the field of cryptocurrency but also an important step for the United States in global financial leadership. For the first time, we have established clear rules for stablecoins, which are the core of open, programmable monetary infrastructure. For a long time, regulatory uncertainty has hindered industry development, forcing developers to turn overseas. This act changes that situation, providing legal clarity for stablecoins and laying the groundwork for broader applications of cryptocurrency."

A partner at an international law firm also stated: "This is a watershed moment for institutional financial services. The 'GENIUS Act' authorizes the tokenization of fiat currency and related regulations, thereby legitimizing digital dollarization."

The Perfect Storm of Digital Assets

A chief technology officer of a developer platform stated: "The GENIUS Act brings much-anticipated clarity for institutions, enabling programmable currency to achieve legalization at internet speed. The significance of this legislation lies in its reduction of regulatory uncertainty that hinders institutional adoption."

Moreover, the introduction of the "GENIUS Act" is not an isolated event. The current government's support for digital assets is surging, with a comprehensive upgrade in momentum. Some restrictive legislation has been abolished, collectively giving rise to a perfect storm. The Chief Technology Officer excitedly stated: "We see large banks that previously held a cautious attitude immediately showing interest. Now, with the implementation of the 'GENIUS Act', we believe that all large banks will issue or support stablecoins in some form. This will usher in a new era of programmable currency that is trustworthy, regulated, and designed for the speed of internet scale."

The bill will also strengthen the dominance of the US dollar, promote dollar-based innovation, and consolidate the dollar's position as the global reserve currency for decades to come. A president of a crypto-native investment firm commented: "The GENIUS Act will go down in history as a foundational law that propels cryptocurrency into the mainstream asset class. By catalyzing dollar innovation, this bill will ensure the dollar's status as the global reserve currency for decades to come, enhance national security, and unlock financial opportunities worldwide."

Stablecoin "killer applications" emerge

What major application scenarios will the "GENIUS Act" give rise to? What can we expect in the coming years? Industry experts believe that the Act will unlock true innovations, including instant remittances, AI-native payments, and global trade without intermediaries.

An expert added: "The opportunity for stablecoins does not lie in holding them, unless used for DeFi to earn returns. The real opportunity lies in companies issuing their own stablecoins, such as payment processors integrating stablecoins and fintech companies launching their own tokens."

In addition to attempting to issue its own stablecoin, a large bank made headlines this week for allowing customers to use Bitcoin as collateral for loans. Thanks to the GEN Act, the bank is developing a new plan that allows customers to pledge Bitcoin or Ethereum to obtain cash loans, similar to the model of using stocks or real estate as collateral.

The impact of the "GENIUS Act" spans the entire industry, with DeFi platforms and tokenized RWAs also receiving significant attention. A chief legal officer of a DEX aggregation platform stated: "Tokenization technology has become a core focus for traditional financial giants, as it significantly optimizes the current financial standard system while greatly enhancing liquidity accessibility. With the help of blockchain technology, tokenization breaks through geographical limitations, allowing for the integration of limited and fragmented liquidity markets, providing real-time access to global 24/7 continuous multi-source liquidity."

The GENIUS Act and the Development of DeFi

One interesting provision in the "GENIUS Act" is the prohibition of paying interest or yields to stablecoin holders, which could trigger a surge in demand for DeFi yield opportunities. An industry expert stated: "According to the 'GENIUS Act', stablecoins do not pay interest to end users, thus stablecoins become depreciating assets. Holders will seek yields, which is exactly where DeFi comes into play. If the Treasury's predictions are correct, trillions of dollars in stablecoins will enter the market, and as users maximize returns through various yield strategies, we will see a 'super DeFi summer'."

Another expert added: "The regulatory clarity brought by the 'GENIUS Act' allows businesses and institutions to utilize stablecoins for fast, low-cost cross-border payments, capital optimization, and real-time settlement, bypassing traditional financial banking channels and unleashing operational efficiency. This is a positive advancement for DeFi. It also provides assurance for institutions and other traditional financial participants, enabling them to fully engage in this field."

Political Influence and Future Outlook

Despite some political factors that may affect the implementation of the GENIUS Act, industry experts generally believe that the momentum for cryptocurrency adoption has surpassed political divides. One expert stated: "The cryptocurrency industry has demonstrated resilience through various challenges over the years. The key is that institutions are building real utility on the blockchain, and these application scenarios address real issues such as settlement speed, operational costs, and 24/7 availability, which is the driving force behind lasting adoption."

Another expert also holds an optimistic view: "I believe the trend is irreversible, and cryptocurrencies will quickly integrate into the core of the US economy, the global economy, and the financial services industry."

In the face of global debt expansion, liquidity expansion, geopolitical uncertainty, and declining interest rates, the U.S. friendly regulation of digital assets may mean "this train is unstoppable." As an expert emphasized: "We are entering a rare window period where fundamentals, liquidity, and macro dynamics are all positively aligned, and this is precisely the moment to unlock the maximum upside potential."