Solana News Today: GENIUS Act Drives 90-95% ETF Approval Chances, Pushing Capital Toward DeFi

The GENIUS Act, a regulatory framework enacted to reshape stablecoin dynamics, is catalyzing a shift in institutional investment strategies toward decentralized finance (DeFi) platforms. By prohibiting stablecoin issuers from paying interest to holders, the Act has effectively curtailed a key revenue stream for traditional stablecoin models. Institutions previously reliant on interest from Treasury bill-backed stablecoins now face a structural barrier, as returns from reserves must be retained by banks and broker-dealers rather than distributed to investors. This regulatory pivot has created a vacuum in yield opportunities, prompting institutional capital to explore DeFi ecosystems where programmable yield, perpetual liquidity pools, and tokenized money market funds offer alternative avenues for returns [1].

DeFi platforms, underpinned by smart contracts, enable investors to lock stablecoins into lending protocols or tokenized assets, generating variable returns tied to real-time economic activity. For instance, tokenized money market funds linked to government debt provide interest through on-chain instruments, attracting large fiduciary-managed funds seeking compliance-driven returns. Notably, major stablecoins like USDT and USDC—historically non-yield-bearing—remain unaffected, but the Act’s restrictions on new yield-bearing stablecoin issuance have raised entry barriers for emerging projects. This regulatory clarity, however, has inadvertently streamlined competition, pushing investors toward decentralized infrastructure with transparent, rule-based mechanisms for capital deployment [1].

The Act’s emphasis on transparency and regulatory oversight has also accelerated the adoption of DeFi’s 24/7 operational model, which aligns with cross-border treasury needs and rapid collateral management. Unlike traditional banking systems constrained by operating hours, DeFi’s continuous liquidity facilitates global capital flows, a feature increasingly valued by institutional investors. Meanwhile, banks are exploring their own stablecoin solutions to onboard retail users, potentially channeling millions into crypto rails. Analysts predict that traditional finance (TradFi) may respond by building regulated lending platforms mirroring DeFi yields, yet the Act’s immediate impact is steering capital toward on-chain solutions [1].

Beyond direct regulatory effects, the GENIUS Act’s influence extends to broader market dynamics. The 2025 approval of novel cryptocurrency exchange-traded funds (ETFs) marks a pivotal integration of decentralized finance into mainstream portfolios. U.S. regulators, including the Securities and Exchange Commission (SEC), have signaled openness to spot ETFs for altcoins like Solana (SOL) and Ripple (XRP), a move that reflects the Act’s role in fostering a compliant yet innovative financial ecosystem. For example, the REX-Osprey Solana Staking ETF (SSK), launched in July 2025, combined custody of SOL tokens with staking yields, setting a precedent for institutional-grade crypto exposure [2]. Analysts estimate a 90–95% probability of similar ETF approvals, underscoring the Act’s indirect role in legitimizing decentralized yield strategies [2].

The Act’s regulatory clarity has also resolved ambiguities around asset classifications, as seen with Ripple’s XRP. A 2023 SEC ruling clarified that XRP is not a security in secondary markets, emboldening asset managers to submit ETF proposals. With a 95% approval chance for XRP ETFs by year-end, this development highlights the Act’s capacity to align decentralized finance with legal frameworks, enabling institutional participation in cross-border payment networks [2]. Similarly, Dogecoin (DOGE) and Polkadot (DOT) are being evaluated for ETF inclusion, with their market liquidity and technical architectures—such as Polkadot’s interoperable blockchain infrastructure—positioning them as viable candidates for diversified investment strategies [2].

Critically, the SEC’s incremental approval approach—favoring single-asset ETFs over multi-asset funds—reflects a balanced regulatory stance. By prioritizing standardized oversight for smaller assets, the agency ensures that the expansion of crypto ETFs under the GENIUS Act remains aligned with investor protections. For instance, the conversion of Bitwise’s index fund to an ETF, though paused for review, signals the SEC’s focus on establishing robust compliance mechanisms [2].

The broader implications of these developments are profound. Staking-based ETFs like SSK generate passive income through blockchain participation, offering returns that outpace traditional markets. This aligns with the Act’s vision of leveraging decentralized technologies to enhance capital efficiency while reducing reliance on centralized intermediaries. Analysts project that Solana ETFs could attract $3–6 billion in inflows, potentially boosting liquidity and price stability, while Dogecoin’s ETF approval might legitimize meme-driven assets within diversified portfolios [2].

Ultimately, the GENIUS Act is redirecting yield-seeking behavior toward decentralized infrastructure without stifling innovation. By creating a regulatory environment that balances transparency with oversight, the Act is enabling investors to access decentralized yield strategies that are both scalable and compliant. As more altcoin ETFs gain traction, the focus will remain on maintaining the integrity and transparency required to sustain long-term institutional confidence in decentralized finance [1].

Source: [1] [How the GENIUS Act Propels Decentralized Yield Strategies for Investors](https://coinmarketcap.com/community/articles/6882a9582eb2b36094751924/) [2] [New Crypto ETFs to Watch in 2025: Top 10 Funds Likely to …](https://www.forbes.com/digital-assets/assets/payrue-propel/)