Crypto’s New Messiah: Stablecoins Storm Capitol!

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Hardly had the GENIUS Act’s ink dried upon the parchment when its reverberations began to quake the very foundations of the crypto realm. In the span of a mere seven sunrises, the sector swelled by nearly four billion dollars, propelling the stablecoin market to a majestic sum exceeding 264 billion, and igniting a frenzied dance among corporations vying for a share of this miraculous bounty.

Such a surge was not an unforeseen spectacle. The legislative marvel, aptly dubbed the GENIUS Act, bestows upon banks, asset managers, and other institutional titans a federal framework to conjure fiat-backed stablecoins—freeing them from the oppressive specter of enforcement by the SEC.

With regulatory clarity comes a new breed of capital, a cavalcade of fresh contenders, and an intensification of rivalry. The portents of this transformation had already begun to stir in the cryptic shadows, long before the act was even inked.

In a May interview with Yahoo Finance, a scribe dared to inquire of Coinbase’s chieftain, the estimable Mr. Brian Armstrong, “Would you not worry that the hallowed halls of banking might now meddle in the stablecoin domain?” To which he replied with a wry smirk: “No. I believe every soul—yes, even those with a penchant for old money—should have the right to conjure their own stablecoins.” (🤷‍♂️)

And so, the traditional financiers nodded in agreement. As fresh blood floods the arena, the focus shifts from the mere existence of stablecoins to the arcane artistry behind their design and the very institutions that birth them.

Not All Stablecoins Are Crafted Alike

Although every stablecoin aspires to a placid existence, they differ as stars from the void in their methods of stability. These ethereal tokens fall into four distinct classes: the fiat-backed, the crypto-backed, the algorithmic, and the commodity-backed.

The fiat-backed stablecoins, in their most pedestrian form, are tethered 1:1 to the realm of fiat currency—such as the US dollar—and are buttressed by stalwarts like cash and short-term assets (for example, US Treasurys). At this very moment, they command roughly 85% of the stablecoin dominion.

The GENIUS Act, in a masterstroke of legislative alchemy, singles out this variety. The titans of this realm—USDt (USDT) by Tether and USD Coin (USDC) by Circle, whose combined market cap soars over 227 billion—are now ensnared by the Act’s requirements: to hold full reserves, submit to audits, and secure the proper licensing from the authorities.

Then there are the crypto-backed stablecoins, those enigmatic tokens overcollateralized with crypto assets such as ETH or tokenized Bitcoin. The exemplar of this breed is DAI (once known as MakerDAO), which, according to the oracle DefiLlama, claims a market cap of around 4.35 billion.

The remaining two categories, though minor in stature, are not without their quirks. The algorithmic stablecoins, which seek to balance their peg by conjuring or annihilating supply with mathematical precision, have revealed their fragility—most notably in the dramatic collapse of the Terra ecosystem. Under the GENIUS Act, they are consigned to a fate of separate, perhaps even more arduous, treatment.

And then come the commodity-backed stablecoins, such as Pax Gold (PAXG), which draw their essence from the tangible world of commodities like gold. These could serve as a shield against the specter of inflation, yet remain ensnared by the chains of liquidity and the labyrinthine complexities of custodianship.

Behold, the Institutions March In!

Since the GENIUS Act was sanctified into law on the 18th of July, a veritable army of businesses, institutions, and banks have stormed the gates of the stablecoin market.

On a fateful Tuesday, Anchorage Digital—the lone federally chartered crypto bank in the United States—unveiled its stablecoin issuance platform in a grand alliance with Ethena Labs. This bold initiative will usher Ethena’s USDtb stablecoin onto domestic shores, under the watchful eye of the GENIUS Act.

On that very same day, the venerable Wall Street asset manager WisdomTree unfurled its own creation: USDW, a dollar-backed stablecoin designed to empower dividend-paying tokenized assets. In doing so, WisdomTree has carved a niche as one of the first asset managers to stride confidently into the regulated stablecoin space.

And let us not overlook the titans of finance themselves. Merely a few days before the Act’s signing, Bank of America’s CEO, the sagacious Mr. Brian Moynihan, hinted that his institution was exploring the issuance of dollar-backed stablecoins—contingent, of course, on full regulatory alignment under the GENIUS Act. Prior to this revelation, both JPMorgan and Citigroup had signaled their intentions to join the fray.

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2025-07-25 03:19