GENIUS Act Sparks 40% Growth for USDC, Goldman Sachs Predicts

The signing of the GENIUS Act by the has marked the implementation of the first federal regulatory framework for stablecoins globally. This development has injected new vitality into the stablecoin market, often referred to as the "summer of stablecoins." The global stablecoin market has reached approximately 2700 100 million.

The enactment of this law has sparked a debate on whether stablecoins could disrupt traditional financial systems. Some argue that stablecoins could serve as a breeding ground for Ponzi schemes, while others see them as a promising avenue for inclusive finance. However, Goldman Sachs has expressed a more cautious stance. The firm believes that while stablecoins have the potential to revolutionize the financial landscape, it is still too early to declare that they will fundamentally disrupt traditional finance. The firm's perspective is that stablecoins, while innovative, still face significant regulatory and technological challenges that need to be addressed before they can truly challenge the status quo.

Stablecoins are currently primarily used in cryptocurrency trading and for obtaining foreign dollars. There is an opinion that they could reshape and innovate the traditional financial system through blockchain efficiency. However, Goldman Sachs' research department, in a report released on Tuesday, pointed out that the possibility of a complete overhaul is low. Analysts Will Nance and James Yaro noted in the report that the benefits of stablecoins would primarily accumulate in the infrastructure layer of the financial industry, particularly in areas such as interbank payments, capital market settlements, and complex cross-border transactions. However, the report suggests that the threat to payment services, including the consumer credit card ecosystem, is limited, and the current overall poor performance has created a buying opportunity. Visa and MasterCard are not competitors but are "likely to play an important role in the large-scale promotion of stablecoin payments on the consumer end."

The report also noted that the market has overestimated the risks faced by remittance service providers such as Remitly and Western Union. Goldman Sachs believes that stablecoins that meet the requirements of the GENIUS Act, such as Circle's USDC, will erode the market share of USDT. The company predicts that the scale of USDC will increase by 770 100 million, with a compound annual growth rate expected to reach 40% from 2024 to 2027. Despite Circle's valuation surge following its IPO this year, Goldman Sachs is more optimistic about Robinhood's continued innovation in the cryptocurrency sector.