The GENIUS Act was voted by the US Senate to see the global stablecoin regulatory landscape

Author: Gyro Finance

Whether admitted or not, from the perspective of applications alone, there is no essential difference in the current crypto world compared with the crypto world 5 or even 10 years ago. Of course, the scale must continue to increase, and Defi is also the biggest highlight, but in the final analysis, only currency applications in the crypto market are the most popular, except for Bitcoin, which is stablecoin.

They are both out of the circle, but the paths of the two are very inconsistent. Bitcoin has conquered people with its rise, drawing a jaw-dropping 100-fold growth curve, successfully making the world a name for it, and is the main representative of decentralized currencies. But if measured from a practical rather than a value scale, stablecoins are truly a cryptocurrency that can truly achieve large-scale adoption on a global scale.

To date, the global stablecoin market value has reached US$243.8 billion. According to panel data provided by Visa, in the past 12 months, the total transaction volume of stablecoins has reached US$33.4 trillion, the total transaction number has reached an astonishing 5.8 billion, and the total number of active unique addresses has also reached 250 million.

The high frequency of use and large scale are enough to show that the application needs and application logic of stablecoins are basically mature, but from a regulatory perspective, stablecoins are still in the running-in stage. In recent years, global regulation around stablecoins has been continuously improving. Just today, the US Senate voted to pass the "Guiding and Promoting the Innovation Act of the United States Stablecoin Countries" (also known as the GENIUS Act), clearing the obstacles for global stablecoin regulation.

01. Stablecoins develop rapidly and have outstanding head effect

Stablecoins, as the name suggests, are crypto assets that provide value stability by pegging to underlying assets such as fiat currencies, precious metals, commodities or asset portfolios. The main goal is to eliminate the volatility unique to many cryptocurrencies and provide users with reliable settlement, value storage and investment tools. As a value scale in the crypto market, every expansion of stablecoins reflects the growth of industry scale. In 2017, the total circulation of global stablecoins was less than US$1 billion, but now it is close to US$250 billion, and the global crypto market has gone from less than one trillion to a scale of 3 trillion, from a narrow marginal market to a mainstream vision.

Judging from the recent data, this bull market can be regarded as a bull market for stablecoins. After the FTX incident, the global stablecoin supply returned to US$120 billion from 190 billion, but after that, the stablecoin supply grew steadily and continued to grow within 18 months. In contrast, BTC climbed all the way from US$17,500 at the bottom and came again above US$100,000. The reason is that the liquidity of this bull market comes from external institutions, and after external institutions intervene, stablecoins are usually the first choice as the medium, so they show the characteristics of increasing external liquidity and increasing stablecoins scale.

To this day, the types of stablecoins are also diverse and complex. From the control center, centralized stablecoins can be distinguished from decentralized stablecoins, from fiat currency types, they can be divided into US dollar stablecoins and non-US dollar stablecoins, and they can even be divided into interest-bearing stablecoins and non-interest-bearing stablecoins from interest-bearing or not. From collateral, they can also be divided into US bonds, US dollar or digital asset-bearing stablecoins, with a wide coverage. Unlike other use cases, although the market has begun to show stablecoins that claim interest or rebate, as the currency value is becoming stable, stablecoins are essentially core pricing tools, not used for speculation, and there are no official institutions to restrict them, and can be adopted globally. This also laid the foundation for stablecoins to jump out of the circle and become global currency.

In terms of coverage, in addition to mainstream regions such as Europe, the United States, Japan and South Korea, emerging markets such as Brazil, India, Indonesia, Nigeria and Turkey, especially areas with weak financial infrastructure and deep inflation, have begun to use stablecoins for daily trading. According to a report released by Visa last year, the most popular use of stablecoins in non-crypto is currency substitution (69%), followed by payments for goods and services (39%) and cross-border payments (39%).

It is enough to see that stablecoins have begun to get rid of the label of crypto investment and have become an important entry point for the integration of the crypto market and the global economy. Against this background, the development pattern of global stablecoins has also attracted much attention. In terms of market share, US dollar stablecoins account for 99% of the stablecoin market, which also makes stablecoins nicknamed the "USD branch".

From a subdivision, due to the scale effect of the currency itself, the strong will always be strong and the head will become prominent are key features of the stablecoin field. According to one side, USDT has become an absolute leader, with a market share of US$152 billion, accounting for 62.29% of the total market. The second is USDC, with a market size of approximately US$60.3 billion, accounting for 24.71%. These two alone account for more than 80% of the total market, which shows the degree of concentration. The third place is USDe, which breaks through the siege with a unique mechanism and high yield. Strictly speaking, it is a semi-centralized stablecoin with a current market size of US$4.9 billion. Since Terra, algorithmic stablecoins have declined. In the stablecoin ranking, only decentralized stablecoins in the Sky ecosystem are still at the forefront, with USDS about US$3.5 billion. Given the diversion effect, DAI is now only US$4.5 billion. In terms of public chains, Ethereum occupies an absolute dominance, with a market share of up to 50%. Since then, it is Tron (31.36%), Solana (4.85%) and BSC (4.15%).

In terms of business, stablecoin issuance is a harmless transaction. Large-scale scale can make the marginal cost of issuing institutions infinitely approach zero. The method of directly exchanging digital currency for cash can make the issuer profitable from risk-free returns. Take USDT’s issuer Tether as an example. According to its full-year 2024 revenue report, it achieved a net profit of US$13.7 billion in one year, and the group’s net assets soared to US$20 billion, while the company’s team was only 165 people, and the employee square footage was amazing. Such high returns have attracted the entry of major institutions. In recent years, traditional financial institutions such as Visa and Paypal are actively deploying this sector, and Internet companies are also ready to move. In addition to overseas Meta, domestic JD.com also hopes to get a share of the pie in Hong Kong. At present, the Trump family project WLFI is also launching the stablecoin USD1, which was soft-started on April 12. It has rapidly expanded and integrated more than 10 protocols or applications.

02. **Regulatory running-in accelerates, the US Senate passes the

GENIUS Act**

Institutions are rushing to the ground, and supervision is coming as scheduled. Up to now, looking around the world, including the United States, the European Union, Singapore, Dubai, and Hong Kong, have begun or have improved legislation around the stablecoin framework. The United States, the crypto-centered center, is undoubtedly the most eye-catching region in the world.

From the perspective of US regulation alone, stablecoins have gone through a complete process of high uncertainty to definite direction. Before 2025, the US Congress has no special regulations on stablecoins and cryptocurrencies. In existing regulations, the SEC, CFTC and OCC have defined stablecoins to gain dominance in this emerging sector. The US Financial Crime Enforcement Bureau uses the licensing system as a starting point to supervise the entities engaged in cryptocurrency issuance and trading, while the SEC relies on the Securities Trading Law to accuse some stablecoins (such as BUSD and USDC) as securities. The commodity theory of CFTC makes it focus on the anti-fraud and anti-market manipulation of stablecoins. The complex regulatory nesting not only makes it difficult to define the subject's control, but under the US administrative system, the state-level stablecoin regulatory environment is also showing a diversified trend. There are currency trader licenses under state laws. Take New York as an example, which has independent cryptocurrency licenses.

It is enough to see that the regulation of stablecoins before 2025 is quite fragmented, and there is even regulatory chaos caused by the struggle between regulators, which has brought high uncertainty and compliance difficulties to the stablecoin industry. But now, with Trump taking office, the regulation of stablecoins has also been pressed to accelerate.

As early as February this year, Bryan Steil, chairman of the U.S. House Digital Assets Subcommittee, and French Hill, chairman of the Financial Services Committee, submitted the draft "Stablecoin Transparency and Responsibility Promotion Ledger Economy Act 2025" ("STABLE"). In the same month, Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand and Cynthia Lummis jointly proposed the "Guiding and Building U.S. Stablecoin National Innovation Act" in the Senate.

The concentrated proposal of the two major bills is not an accident, but a forward-looking action supported by the top level. At the first crypto summit held by the White House in March this year, Trump expressed interest in stablecoins. Not only did he speak that this would become a "very promising" growth model, but he also bluntly expressed his hope that Congress can submit relevant legislation to the presidential office before the recession in August, sending a clear signal.

On March 17, the Senate Banking Committee passed the GENIUS bill with a bipartisan support rate of 18 votes in favor and 6 votes against, formally submitting the bill to the Senate. On March 26, the STABLE bill was successfully submitted for a revised version, and was passed by the House Financial Services Committee on April 3 and submitted to the House for a full vote.

Although they are both stablecoin bills, the focus of the two is slightly different. STABLE prioritizes unified federal control, while GENIUS emphasizes the establishment of a dual-regulatory management system parallel to the state and federal level; STABLE limits issuance qualifications to deposit institutions with insurance and non-bank institutions that have federal approval, while GENIUS allows more types of issuance entities to open access. Both require 1:1 reserve support and monthly disclosure, but STABLE is more stringent, requiring the Federal Deposit Insurance Corporation (FDIC) to provide insurance, and also imposes a two-year ban on algorithmic stablecoins. GENIUS allows the exploration of algorithmic stablecoins under specific conditions. In addition, the GENIUS Act supports stablecoins to provide interest or income to holders, but the STABLE Act expressly prohibits interest payments.

In the process of practice, both major bills faced doubts from many aspects. The state government opposed the federal regulatory priority for STABLE. Some industry insiders expressed dissatisfaction with the strict terms. GENIUS mainly ushered in discussions on compliance costs, believing that the dual-track system will increase compliance costs. The bill is too focused on the domestic US market and will ignore the use needs of third world countries.

At present, the GENIUS Act is progressing faster than STABLE. On May 9, in the Senate vote, the GENIUS Act vote failed with 48 votes in favor of 49 votes against it, because the Democrats demanded strengthening anti-corruption clauses and prohibiting executive members from holding cryptocurrency, bluntly stated that Trump's crypto corruption was not allowed, but the Republicans did not give in. In response to this incident, the US Treasury Secretary tweeted that US lawmakers did nothing and expressed their dissatisfaction with the decision.

Not long afterwards, the GENIUS Act passed the second level and divided the regulatory mechanism through scale in the updated version, that is, stablecoins with assets of more than 10 billion are regulated by federal supervision, while stablecoins with market value of less than 10 billion are self-regulated by states. At the same time, it is clear that they are divided from the insurance credit and government credit of the United States, reducing systematization risks, and adding restrictions on technology companies' participation in stablecoins. Although the updated bill has not yet touched the moral norms questioned by the Democratic Party, it has made progress in the protection of investors and existing mechanisms. Against this background, some Democratic parties have successfully turned against each other. The U.S. Senate passed the procedural motion of the GENIUS Act on the evening of the 19th with a vote of 66 votes and 32 votes against it, clearing the obstacles to final legislation. The next step will be to enter the Senate debate and amendment process, and the subsequent process is to hand the bill over to the House of Representatives for deliberation. However, considering that the House of Representatives' pass threshold is relatively low, the possibility of the bill being submitted to the President's Office for signature is very high.

The passage of this bill is undoubtedly an important milestone in the history of US crypto assets. It will fill the regulatory gap in US stablecoins, clarify regulatory entities and rules, further promote the vigorous development of the US stablecoin industry, and contribute to the mainstreaming of the crypto industry again. Starting from the United States itself, after the promulgation of the regulations, the benefits of the US dollar's deep penetration of influence based on stablecoins will be more prominent, and the trend of the crypto market becoming an affiliate of the US dollar continues to increase, providing a core driving force for the US dollar to build centralized and decentralized hegemony. It is worth noting that no matter what kind of bill, it requires stablecoin holders to hold US Treasury bonds, US dollar, etc., which also creates new and continuous purchasing demand for US bonds.

03. **Outside the United States, global stablecoin regulation has

taken shape**

There will only be clear stablecoin regulation in 2025, which is enough to see that the regulation of stablecoins in the United States is not at the forefront. In fact, long before the United States, the EU introduced the Crypto Asset Market (MiCA) Act, providing a comprehensive regulatory framework for all crypto assets, including stablecoins. In terms of stablecoins, MiCA divides it into asset reference tokens and electronic currency tokens, and also prohibits algorithmic stablecoins. It requires stablecoin issuing institutions, especially institutions with a certain market size, to maintain 1:1 capital reserves, abide by transparency rules, and complete registration with EU regulators. Meanwhile, the European Insurance and Occupational Pension Administration (EIOPA) recommends that insurance companies holding crypto assets, including stablecoins, be advised to

A strict capital management system is implemented, requiring insurance companies to set aside a capital adequacy ratio of 100% for their holdings of such assets, and regard it as a zero-value asset in the calculation of solvency.

Outside the EU, Hong Kong is also a leader in stablecoin regulation. On December 6, 2024, the Hong Kong government published the "Stablecoin Bill" in the Gazette and submitted it to the Hong Kong Legislative Council for first reading on December 18. According to the latest news, the plan will resume the second reading debate at the Legislative Council meeting on May 21. Hong Kong has a prudent and inclusive attitude towards stablecoin legislation, and also adopts a license licensing system for management. It is clear that the issuer must be established in Hong Kong, have sufficient financial resources and current assets, and pays no less than HK$25 million in equity. It is necessary to ensure that the reserve assets are separated from the combination of other reserve assets, and it is specified that the market value of the reserve assets portfolio must be at any time, at least equivalent to the face value of the stablecoin that has not been redeemed and still circulated, that is, 1:1 reserves. Earlier in July last year, the Hong Kong Monetary Authority announced the list of participants in stablecoin issuers, including JD.com Coin Chain Technology (Hong Kong) Co., Ltd., Yuanbi Innovation Technology Co., Ltd., Standard Chartered Bank (Hong Kong) Co., Ltd., Ann Group Co., Ltd., and Hong Kong Telecommunications Co., Ltd.

In addition to the above regions, Singapore and Dubai have involved stablecoin regulation. Singapore issued a stablecoin regulatory framework in 2023, while Dubai listed stablecoin in the Payment Token Service Ordinance.

Overall, the global regulatory differences in stablecoins are limited, and later generations have obvious signs of absorbing the former's experience. Global regulators have focused on licenses and licensing to regulate issuers, and have made clear provisions on issuance reserves, risk isolation, anti-money laundering and anti-terrorism. The differentiation is mainly reflected in the allowed stablecoin categories, issuer restrictions, and localized anti-money laundering compliance.

However, the introduction of stablecoin regulation in major regions around the world is enough to reflect that the role positioning of stablecoins in the global financial market is moving from no one to a hundred schools of thought. Stablecoins have gradually become an important part of the global currency market. In addition to further enhancing the voice of the crypto market, it has also added a strong mark to killer-level applications in the crypto field. On the other hand, third-world countries can also use stablecoins to conduct 24-hour global settlement, which really realizes Satoshi’s original vision -free electronic cash.

Life changes with change. After a hundred years of encryption, how many claimed value applications still exist after the waves wash away the sand? From the current perspective, at least stablecoins and Bitcoin still have their own significance.