Stablecoin Market Grows 23.5% as Decentralized Yield Protocols Surge Post-GENIUS Act

The U.S. yield-bearing stablecoin market has experienced a surge in supply despite the implementation of the GENIUS Act, which prohibits stablecoin issuers from directly offering interest or yield to investors. The law, signed into effect by President Donald Trump on July 18, 2025, aims to level the playing field with traditional financial institutions and prevent crypto-based competition from disrupting the banking sector [4]. However, the ban has not curtailed demand; instead, it has driven innovation in decentralized protocols that offer yield through staking and liquidity mechanisms [2].

Decentralized protocols such as Ethena and Sky have emerged as leading platforms for investors seeking returns. Since the enactment of the law, the circulating supply of Ethena’s USDe has increased by 70%, reaching 9.49 billion coins, according to DefiLlama data. This has elevated USDe to the third-largest stablecoin by market capitalization. Meanwhile, Sky’s USDS has seen its supply rise by 23% to 4.81 billion, placing it as the fourth-largest stablecoin in circulation [2].

The rise in demand for these tokens has also positively impacted their associated governance tokens. Ethena’s governance token, ENA, has surged nearly 60% since mid-July, trading at $0.58 as of the latest data [2]. Investors are increasingly shifting to protocol-based yield models, which remain legally compliant under the GENIUS Act. By staking stablecoins within these systems, tokenholders continue to earn passive income without violating regulatory constraints [2].

Industry observers have noted that this shift reflects a broader trend in the post-GENIUS landscape. Anthony Yim, co-founder of Artemis, highlighted that yield-bearing stablecoin supply has grown significantly post-regulation [7]. Julio Moreno of CryptoQuant added that investors are “flocking to USDe and USDS” because they offer yield in a more compliant and decentralized manner [2]. These protocols often leverage real-world assets like U.S. Treasurys or lending platforms to generate returns. Currently, staked USDe offers an APY of 10.86%, while staked USDS provides 4.75%. After adjusting for the U.S. inflation rate of 2.7% in June, these returns equate to 8.16% and 2.05%, respectively [2].

The stablecoin market as a whole has grown from $205 billion at the start of 2025 to $268 billion, a 23.5% increase [2]. Julio Moreno believes that if the current pace continues, stablecoin supply could reach $300 billion by year-end [2]. However, some experts caution that traditional finance could pose a challenge. Temujin Louie, CEO of Wanchain, warned that tokenization of money market funds by traditional institutions might limit stablecoin growth, as regulated, interest-bearing products emerge on blockchain platforms [2].

Despite regulatory pressures, the market’s resilience underscores the growing role of digital assets in the financial ecosystem. While the GENIUS Act has changed the structure of yield generation, it has not diminished investor demand. Instead, it has spurred innovation in protocol-level yield mechanisms, demonstrating the adaptability of the decentralized finance sector in a rapidly evolving regulatory environment [2].

Source:

[1] title: Stablecoin Market Sees Surge Amid GENIUS Act Restrictions (url: https://www.binance.com/en/square/post/08-05-2025-stablecoin-market-sees-surge-amid-genius-act-restrictions-27895102677217)

[2] title: "After the Passage of the U.S. Genius Act, Supply of Yield (url: https://bloomingbit.io/en/feed/news/94238)

[4] title: Trump Signs GENIUS Act Banning Yield-Bearing Stablecoins (url: https://www.ainvest.com/news/ethereum-news-today-trump-signs-genius-act-banning-yield-bearing-stablecoins-2508/)

[7] title: Yield-Bearing Stablecoin Market Surges Despite GENIUS Act Ban on Interest (url: https://thecoinrise.com/yield-bearing-stablecoin-market-surges-despite-genius-act-ban-on-interest/)

[8] title: SEC Updates Stablecoin Accounting Rules, Opening Door (url: https://crypto-economy.com/sec-updates-stablecoin-accounting-rules-opening-door-to-cash-classification/)

[9] title: WAX and Tether co-founder on the impact of the GENIUS Act (url: https://crypto.news/wax-tether-co-founder-on-the-impact-of-the-genius-act/)