The passage of the GENIUS Act by the US Senate represents a significant step in stablecoin regulation, affecting stock markets. Coinbase and Circle stocks saw a substantial increase following the bill's approval.
Key Provisions of the GENIUS Act
The bill requires stablecoins to be fully collateralized 1:1 with cash or short-term Treasury securities, ensuring each token can be fully redeemed and mitigating the risk of undercollateralization. Issuers like Circle are now required to conduct monthly public audits of their reserves, providing unprecedented transparency to investors. For the first time, stablecoin issuers will fall under the jurisdiction of the Treasury and OCC for licensing and supervision, similar to banks. Additionally, interoperability standards are mandated, allowing stablecoins to exchange freely.
Market Reaction to Bill's Passage
The market responded quickly to the news. Circle's trading volume spiked to 4.5 million shares—three times its 30-day average—as its stock soared 500% from its IPO price. Meanwhile, Coinbase added $4.5 billion in market capitalization as options traders placed bets on the stock reaching $350 by July. This optimism rippled through the market with Robinhood shares rising 4.5%, while PayPal and Block saw declines.
Future of Stablecoins and Impact on Crypto Market
Some analysts predict fresh liquidity entering the crypto system due to stablecoin growth, traditionally signaling upward trends for Bitcoin. However, others caution that Tether maintains dominance with a 70% market share, and the GENIUS Act does not address macroeconomic factors such as Fed policy. A crucial metric to monitor will be USDC payment adoption; Coinbase's recent integration with Shopify allows merchants to settle payments with stablecoins, potentially disrupting Visa and Mastercard's e-commerce dominance.
The Senate's approval of the GENIUS Act is more than just a regulatory milestone; it is transforming the role of crypto in mainstream finance. How stablecoin markets evolve will depend on House negotiations and real-world adoption.
