Stablecoins reached a market cap of $310 billion in 2025, marking a 30% share of crypto transaction volume and driving mainstream . This growth underscores the shift toward blockchain-based payments in CeFi and DeFi ecosystems. Regulatory frameworks like the GENIUS Act play a pivotal role in this evolution.
Understanding the GENIUS Act
The GENIUS Act, signed into law by President Trump in July 2025, establishes federal rules for stablecoins as payment instruments. It requires one-to-one reserves in cash or Treasuries, ensuring stability and consumer protection.
This legislation preempts certain state laws, allowing interstate operations without extra licenses. It bars issuers from paying direct interest but permits third-party platforms to offer rewards, balancing innovation with oversight.
According to a Chainalysis report, such regulations have boosted confidence, contributing to stablecoin's role in global finance.
Brian Armstrong's Firm Stance
Coinbase CEO Brian Armstrong declared reopening the GENIUS Act a
red line
for the crypto industry. He accused banks of unethical lobbying to eliminate stablecoin rewards entirely.
'We won’t let anyone reopen GENIUS,' Armstrong stated on X, emphasizing advocacy for users amid adoption trends. His position reflects concerns over stifled competition in CeFi platforms.
Armstrong predicts banks will eventually seek to offer yields on stablecoins, recognizing the opportunity. This flip could accelerate between traditional banking and DeFi.
bank Lobbying and Its Implications
Banks earn about 4% on Federal Reserve reserves while paying users near zero on deposits. They lobby Congress claiming stablecoin rewards threaten safety and community outflows.
Independent analyses, like one from Charles River Associates in July 2025, show no evidence of such outflows. Blockchain Association CEO Summer Mersinger argues,
Legacy financial firms should embrace competition, not try to kneecap emerging players through anti-innovation regulations.
This lobbying aims to protect monopolies, potentially slowing DeFi growth where yields attract users. Regulation must prioritize consumer benefits over incumbent interests.
Impact on Crypto adoption and Sectors
Crypto surged in 2025, with stablecoins integral to everyday finance in emerging markets. TRM Labs notes over 70% of jurisdictions advanced stablecoin rules, mirroring the GENIUS Act's influence.
In CeFi, platforms like offer rewards, enhancing user retention amid regulation clarity. DeFi protocols stablecoins for layered systems, with total value locked hitting new highs.
A Treasury report highlights stablecoins preserve banking stability while boosting innovation. Reopening the act risks fragmenting this progress.
Broader Regulatory Trends in 2025
Global shifts included the EU's MiCA framework and U.S. tax relief drafts for stablecoin transactions up to $200. These exempt capital gains, encouraging without tax burdens.
staking and mining rewards can defer income recognition for up to five years, per proposed bills. Such measures support expansion and CeFi .
Elliptic's review notes a move from enforcement to comprehensive frameworks, fostering trust. Stablecoins now handle billions in transfers faster and cheaper than traditional systems.
Future Outlook for Regulation and Innovation
Attempts to amend the GENIUS Act could undermine U.S. leadership in digital assets. Competition from stablecoins forces banks to innovate, potentially leading to hybrid models.
Analysts from Galaxy Research report crypto-collateralized lending grew 38.5% in Q3 2025 to $73.59 billion. This trend signals robust across sectors.
Preserving the act ensures balanced regulation, promoting economic freedom through blockchain. Stakeholders must monitor lobbying to safeguard progress.
This controversy reveals the ongoing struggle between traditional finance and crypto innovation. It emphasizes the need for policies that drive in CeFi and DeFi while maintaining fair regulation.
