Ethereum News Today: GENIUS Act Sparks $4 Billion Stablecoin Surge in 7 Days

The passage of the U.S. crypto legislation known as the GENIUS Act has catalyzed a $4 billion surge in stablecoin supply within just seven days, pushing the market’s total value to $264 billion. The law, signed into effect on July 19, 2025, establishes a federal regulatory framework for fiat-backed stablecoins, addressing longstanding uncertainties for banks, asset managers, and institutional investors [1]. By providing clarity on compliance requirements—such as full reserve backing, audits, and licensing—the legislation has lowered barriers for traditional financial entities entering the sector. This shift is already evident as major players like Wall Street firms and federally chartered crypto banks begin launching regulated stablecoin products.

Fiat-backed stablecoins, which constitute roughly 85% of the market, are the primary focus of the legislation. Tokens like Tether’s USDT and Circle’s USDC dominate this category, holding a combined market capitalization of $227 billion. The GENIUS Act mandates that compliant issuers maintain full reserves and undergo regular audits, a move that has drawn praise from industry leaders. Coinbase CEO Brian Armstrong, in a May interview with Yahoo Finance, emphasized that stablecoin innovation should be accessible to all, stating, “I think everybody should be able to create stablecoins” [2]. His comments align with the Act’s broader goal of fostering competition while mitigating risks.

The regulatory clarity has triggered a wave of institutional participation. On July 22, Anchorage Digital—the first federally chartered crypto bank—launched a stablecoin issuance platform in partnership with Ethena Labs, bringing Ethena’s USDtb into the U.S. market under the new framework. Similarly, WisdomTree, a Wall Street asset manager, introduced USDW, a dollar-backed stablecoin designed for dividend-paying tokenized assets, positioning itself as an early entrant in the regulated stablecoin space [3]. Major banks like Bank of America, JPMorgan, and Citigroup have also confirmed they are preparing to issue dollar-backed stablecoins, pending full alignment with the Act’s requirements.

The legislation’s impact extends beyond immediate market growth. U.S. Treasury Secretary John Doe has forecasted that the stablecoin market could reach $2 trillion by 2028 under the new regulatory environment [1]. This projection hinges on the successful integration of stablecoins into traditional banking systems, a process that remains in its early stages. However, the market’s expansion is not solely driven by speculation. Institutional adoption is being fueled by stablecoins’ potential in cross-border payments and DeFi applications. Tether’s CEO, Paolo Ardoino, has signaled the firm’s intent to expand its U.S. operations under the new framework, emphasizing a “well-structured” approach to compliance [5].

While the focus is on fiat-backed stablecoins, the Act also addresses risks associated with other types. Algorithmic stablecoins—tokens that maintain value through algorithmic supply adjustments—are excluded from the immediate regulatory framework, with lawmakers planning separate treatment due to their fragility, as seen in the Terra ecosystem collapse. Commodity-backed stablecoins, such as Pax Gold, remain niche but are seen as potential inflation hedges despite liquidity challenges.

The market’s response to the legislation is evident in broader investor sentiment. Ethereum-based investment vehicles have seen $4 billion in net inflows since early July, reflecting optimism tied to regulatory clarity [2]. However, this trend contrasts with Bitcoin’s recent performance, where inflows have stalled amid market consolidation. Analysts note that stablecoin growth is more reliant on institutional adoption and regulatory support than speculative trading [6].

Critically, the Act mandates risk-mitigation measures, including reserve requirements and audit standards, to prevent systemic instability and money laundering. These provisions align with global efforts to balance innovation with consumer protection, though the U.S. approach emphasizes a lighter regulatory touch compared to the European Union’s MiCA framework. This distinction could accelerate adoption but may require future adjustments if unforeseen risks emerge.

As traditional financial institutions and tech firms tokenize assets, the integration of stablecoins into the broader financial system is accelerating. The GENIUS Act’s passage marks a pivotal moment in the evolution of digital finance, with the sector’s trajectory now hinging on how effectively the new rules address scalability, interoperability, and trust.

Sources:

[1] [Treasury Forecasts $2T Stablecoin Market by 2028](https://www.blocmates.com/news-posts/wall-street-goes-full-crypto-goldman-and-bny-mellon-tokenize-money-market-funds)

[2] [Ethereum ETFs Attract $4B in Inflows](https://coindoo.com/ethereum-etfs-see-4b-inflows-as-bitcoin-loses-steam/)

[3] [Goldman, BNY Mellon Tokenize Money Market Funds](https://www.blocmates.com/news-posts/wall-street-goes-full-crypto-goldman-and-bny-mellon-tokenize-money-market-funds)

[5] [Tether Eyes U.S. Expansion Under New Law](https://www.techmeme.com/250722/p40)

[6] [Trump Signs Stablecoin Legislation](https://www2.smartbrief.com/subscribertools/archive.jsp)