GENIUS Act Boosts U.S. Stablecoin Market Cap 1.5% to $264 Billion

The U.S. stablecoin market has entered a transformative phase following the enactment of the GENIUS Act, a federal law designed to establish a regulatory framework for fiat-backed stablecoins. Signed into law on July 18, the legislation has catalyzed a dramatic surge in market activity, with the total stablecoin market capitalization exceeding $264 billion within seven days of its passage. This growth, amounting to a $4 billion increase, reflects heightened confidence among traditional financial institutions and signals a pivotal shift in the sector’s trajectory.

The GENIUS Act provides a dual regulatory structure, allowing stablecoin issuers to operate under either a federal charter or state-approved programs. State regulators can oversee issuers with less than $10 billion in circulation, but all entities must adhere to strict reserve requirements. The law mandates that stablecoins be fully backed 1:1 by cash or short-term U.S. Treasuries, with monthly audits conducted by independent firms. CEOs and CFOs are required to personally certify the accuracy of these audits, ensuring transparency and accountability [1].

Major banks, including Bank of America, JPMorgan, and Citigroup, have announced plans to launch or invest in stablecoin ventures, citing the law’s clarity as a key enabler. Bank of America’s CEO, Brian Moynihan, disclosed on July 16 that his institution is exploring dollar-backed stablecoin issuance, while JPMorgan and Citigroup emphasized the GENIUS Act as the catalyst for their strategies. This institutional movement underscores the sector’s growing legitimacy and potential for mainstream adoption [2].

The regulatory framework also excludes the SEC and CFTC from stablecoin oversight, instead assigning primary roles to the OCC and Federal Reserve. This decision removes the threat of enforcement actions for banks, encouraging broader participation while maintaining federal oversight. The law explicitly classifies payment stablecoins as neither securities nor commodities, further distinguishing them from existing regulatory frameworks [3].

Market dynamics are rapidly evolving as well. Anchorage Digital and WisdomTree have launched regulated stablecoin products, with the former partnering with Ethena Labs to issue USDtb and the latter introducing USDW, a dividend-paying tokenized asset. These initiatives highlight the sector’s innovation potential under the new rules. Meanwhile, established players like Tether face challenges in overhauling their reserve structures to meet the law’s stringent requirements. Conversely, Circle’s USDC appears better positioned, as its reserves already align closely with the mandated cash and government debt composition [4].

The market’s response has been marked by both optimism and caution. Analysts view the $264 billion threshold as a “watershed moment” for stablecoins, akin to Bitcoin’s early institutional adoption phases. However, forecasts for the sector’s future remain speculative. A report from MSN suggests the market could grow to $2 trillion by 2028 under sustained regulatory support, though this projection hinges on technological adoption and ongoing compliance with evolving standards [5].

Notably, the stablecoin sector’s growth has occurred against a broader cryptocurrency market that remains below $4 trillion as of July 2025. This divergence highlights stablecoins’ unique role as a hedge against crypto’s volatility, appealing to risk-averse investors and corporations. The Ethereum network alone saw its stablecoin supply exceed $140 billion, driven by increased usage in DeFi protocols and cross-border transactions [6].

Challenges persist, particularly for decentralized stablecoins like DAI, which rely on crypto-backed models incompatible with the law’s cash and Treasury bill requirements. The regulatory clarity provided by the GENIUS Act, however, is expected to spur innovation in token design and use cases, particularly in remittances and asset tokenization.

As the market adjusts to the new framework, regulators and participants are monitoring implementation outcomes. The law’s primary objective of stabilizing the market while attracting institutional capital appears to be achieving its goals, though compliance with global standards and operational risks remain critical considerations.

Source: [1] [Cointelegraph](https://cointelegraph.com/news/us-crypto-legislation-4b-surge-stablecoin-supply) [2] [CoinCentral](https://coincentral.com/banks-rush-into-264-billion-stablecoin-market-after-trump-signs-new-law/) [3] [AInvest](https://www.ainvest.com/news/genius-act-boosts-usd-backed-stablecoin-market-cap-1-5-264-billion-2507/) [4] [Economic Times](https://m.economictimes.com/crypto-news-today-live-23-jul-2025/liveblog/122843856.cms) [5] [MSN](https://www.msn.com/en-us/money/markets/trump-signs-new-stablecoin-law-in-major-milestone-for-crypto-industry/ar-AA1ITavR) [6] [CryptoRank](https://cryptorank.io/news/feed/bee7e-why-is-crypto-down-today-july-24-2025).