The stablecoin regulatory bill now moves to the House of Representatives.
With the Senate having voted in favor of the GENIUS Act on June 17, it’s worth examining what will happen next as stablecoin legislation moves to the House of Representatives and potentially into law.
BitMEX founder Arthur Hayes warned in a post today that there will be a wave of stablecoin companies trying to duplicate Circle’s wildly successful IPO, and that most of them will fail.
Saying Circle’s IPO marks the beginning of a “stablecoin mania,” Hayes suggested that there are just three routes to success for stablecoins, and that two of them are almost certainly closed.
“Distributing a stablecoin can be very expensive unless you are owned by a captive exchange, social media company, or legacy bank,” Hayes said. “Social media companies and banks will never partner with a third party to build and operate their stablecoin; therefore, crypto exchanges are the only game in town.”
And, they are a costly game, he noted. Circle had to pay Coinbase for distribution in the form of half of the net interest income it earns from reserves held in U.S. Treasuries, he said, pointing out that Tether is owned by the same people who own the Bitfinex exchange, and therefore got free distribution.
Tether’s USDT has a market cap of $155 billion and Circle’s USDC has a market cap of almost $62 billion. The No. 3? USDS has a market cap of just $7 billion.
Barriers to entry
Luke Youngblood, founder of lending app Moonwell, said via email that with the GENIUS Act, the U.S. “has positioned itself at the forefront of global stablecoin legitimization.”
However, he added, “this potential dominance hinges entirely on these frameworks crossing the finish line into actual law.”
With companies like Circle, Coinbase and payments processor Stripe leading the development of stablecoin infrastructure, “the U.S. is well-positioned to be the global home of stablecoins,” he said
That infrastructure includes the technical systems necessary for banks, custodians, broker-dealers, and exchanges to integrate stablecoin capabilities into their existing traditional finance operations.
This infrastructure has “taken years to develop and represents a significant barrier to entry for competitors,” Youngblood said. “While other competitors might enter the industry, the original stablecoin issuers still hold a massive advantage and are more likely to be adopted by institutions.”
Integration is key
The GENIUS Act would be a major shift in the stablecoin landscape, said Patrick Gerhart, president of banking operations at Telcoin, in an email.
“Not necessarily in its quantity, but rather in its quality,” he said. “Regulation opens the door for a wave of new issuers, but compliance, interoperability, and utility will ultimately separate the winners from the rest. It’s not just about who has the deepest pockets or the loudest brand but who can integrate with existing financial infrastructure, meet regulatory expectations, and serve people where they are.”
Gerhart said that while banks and big tech platforms may start with a big advantage, “the real long-term value will come from stablecoins that enable programmable, low-cost, and mobile-first financial services.”
An inflection point
Arguing that the Senate’s passage of the GENIUS Act will be a “critical inflection point,” Erbil Karaman, co-founder of PayFi network Huma Finance predicted that stablecoins will “move beyond speculative trading to become essential financial infrastructure.”
A DeFi Summer is coming, he said in an email, and it will be profoundly different from past ones.
“Rather than token speculation, it will be fueled by sustainable yields generated from actual payment flows and institutional adoption of regulated on-chain finance,” Karaman said. “As stablecoins potentially grow toward Citibank’s projected $1.6 trillion market by 2030, the critical infrastructure won’t just be the stablecoins themselves, but the payment financing layer that makes them useful for global commerce.”
