Author: Matt Hougan, Chief Investment Officer of Bitwise; Translated by: AIMan@Jinse Finance
The politicians in Washington did the right thing.
I haven't had the chance to write this sentence for a while, but today I finally have the opportunity to write it.
On Monday, the U.S. Senate passed the final debate of the GENIUS Act with a vote of 66 in favor and 32 against, with 16 Democratic lawmakers crossing party lines to vote in support. The bill provides a solid regulatory framework for stablecoins in the United States.
I don't want to count my chickens before they hatch, but it looks like we will pass the first mature crypto legislation in the U.S. this summer.
This is a big deal.
Apart from the Bitcoin spot ETF approved in January 2024, this is the most significant regulatory advancement in cryptocurrency history, and it may even be more important.
I believe this lays the foundation for long-term sustained growth of crypto assets beyond Bitcoin. The biggest beneficiaries are Ethereum (ETH), Solana (SOL), and various DeFi assets such as Uniswap (UNI) and Aave (AAVE).
Before I explain the reasons, let's first briefly discuss what this is all about.
What is the GENIUS Act?
Stablecoins are one of the killer applications of cryptocurrency. They are digital representations of the U.S. dollar that can circulate on blockchains like Ethereum. Bank wire transfers take 24 hours, while stablecoins can settle in just seconds—just like a text message or email.
Stablecoins barely existed in 2019; today, their global market cap exceeds $200 billion.
Stablecoin Market Cap
Source: Bitwise Asset Management, data from The Block, Coin Metrics, and CoinGecko. Data range from Q1 2020 to Q1 2025.
Note: "Others" include BUSD, crvUSD, DAI, FDUSD, FEI, FRAX, GHO, GUSD, HUSD, LUSD, MIM, PYUSD, TUSD, USDD, USDP, and USDS.
But stablecoins have long been in a regulatory gray area. Stablecoin issuers like Circle must comply with many regulations, but there has been no overall federal framework. The GENIUS Act provides this framework.
The bill ensures:
Stablecoins will be backed 1:1 by U.S. Treasury bonds and U.S. dollar equivalents;
Large stablecoin issuers will register with federal banking regulators;
These issuers will undergo regular audits to ensure their soundness; and
Stablecoin issuers will implement anti-money laundering restrictions on their tokens.
In other words, the bill gives federal government backing to stablecoins, allowing large banks to issue stablecoins and merchants to accept them.
What surprises me is that stablecoins have grown to over $200 billion in assets without the participation of the world's largest financial institutions, and consumers cannot easily distinguish between "good stablecoins" like USDC and "bad stablecoins" like TerraUSD.
With these protections, I expect this market to quickly reach $2.5 trillion. Close your eyes and imagine a world where JPMorgan Chase and Bank of America issue stablecoins; where Amazon gives you a 2% discount for shopping with stablecoins instead of a Visa card; where accepting stablecoins is as common as accepting Venmo or PayPal.
This is the world we are about to live in.
Just the Beginning
Although I am excited about stablecoins themselves, I believe this is just the beginning. Once we achieve normal transfer of dollars on blockchain networks—and with the world's largest financial institutions involved—moving stocks, bonds, and other financial assets on the same track is just a small step.
This is the fundamental argument for investing in non-Bitcoin crypto assets like Ethereum and Solana: over $100 trillion in financial assets will ultimately move to the blockchain. The passage of this bill will further exacerbate this trend.
I suspect the impact here will be similar to the impact of the Bitcoin ETF.
The approval of the Bitcoin spot ETF normalized cryptocurrency as an investment method, and now some of the world's largest institutions have issued Bitcoin ETFs and incorporated them into their portfolios. I believe the approval of stablecoin regulations will normalize cryptocurrency as a financial instrument, paving the way for the world's largest institutions to issue stablecoins and use them for payments.
Simply genius.
