The signing of the GENIUS Act is already impacting the stablecoin market, adding billions of dollars to the sector and increasing interest from major institutional investors.
Capital Generation after the GENIUS Act
In just seven days after the passage of the GENIUS Act, the stablecoin market grew by nearly $4 billion, raising the total stablecoin market capitalization to over $264 billion. This legislation provides banks and other institutional investors with a clear federal framework for working with fiat-backed stablecoins, alleviating concerns about potential restrictions from the U.S. Securities and Exchange Commission (SEC).
Diversity of Stablecoins
Stablecoins can vary significantly in how they achieve stability. They are typically categorized into four types: fiat-backed, crypto-backed, algorithmic, and commodity-backed. Fiat-backed stablecoins are the most common, making up about 85% of the market. The GENIUS Act specifically targets these stablecoins, requiring issuers to hold full reserves and undergo audits.
Institutional Participation in the Market
Since the signing of the GENIUS Act, the number of companies and banks entering the stablecoin market has surged. For instance, Anchorage Digital launched a stablecoin issuance platform in partnership with Ethena Labs. Wall Street asset manager WisdomTree also introduced the dollar-backed stablecoin USDW. Major banks like Bank of America, JPMorgan, and Citigroup are also preparing to enter the stablecoin market.
The GENIUS Act has become a significant step in the development of the stablecoin market, opening new opportunities for institutional investors and stimulating growth in the sector as a whole.
