Stablecoin Market Experiences $4 Billion Surge as Banks and Asset Managers Enter Ecosystem Following GENIUS Act
July 24, 2025 — The stablecoin market has seen a remarkable surge of nearly $4 billion within just a week after the groundbreaking GENIUS Act was signed into law, pushing the total market capitalization of stablecoins above $264 billion. This uptrend signals growing institutional confidence in stablecoins amid newly established regulatory clarity, paving the way for banks, asset managers, and cryptocurrency firms to introduce fresh fiat-backed stablecoin products.
Regulatory Clarity Spurs Institutional Adoption
The GENIUS Act, enacted on July 18, 2025, offers a federal framework that legitimizes fiat-backed stablecoins and shields issuers from potential enforcement actions by the Securities and Exchange Commission (SEC). This unprecedented regulatory clarity has catalyzed fresh capital flows and attracted new market participants, transforming the stablecoin landscape.
In the days leading up to the legislation, industry leaders had already hinted at forthcoming shifts. Coinbase CEO Brian Armstrong, in a May interview with Yahoo Finance, expressed openness towards banks joining the stablecoin market, stating, “No, I think everybody should be able to create stablecoins.” This sentiment has gained traction as major financial institutions move forward with stablecoin initiatives under the new legal framework.
Understanding Stablecoin Varieties
Stablecoins aim to maintain a consistent value, most commonly pegged 1:1 to fiat currencies like the U.S. dollar, though they achieve price stability through various mechanisms:
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Fiat-backed stablecoins: The dominant stablecoin type, making up approximately 85% of the market, are fully backed by fiat currency reserves or short-term government securities. Leading examples include Tether’s USDT and Circle’s USDC, whose combined market capitalization exceeds $227 billion. The GENIUS Act mandates these issuers hold full reserves, conduct regular audits, and obtain appropriate licenses.
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Crypto-backed stablecoins: Collateralized with cryptocurrency assets such as Ether (ETH) or tokenized Bitcoin, these stablecoins, like MakerDAO’s DAI, represent roughly $4.35 billion of market value. They rely on overcollateralization to maintain their peg.
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Algorithmic stablecoins: These use algorithms to control supply and demand, but they have historically been prone to failure, as seen in the collapse of the Terra ecosystem. The GENIUS Act excludes algorithmic stablecoins from its regulatory framework, subjecting them to separate oversight.
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Commodity-backed stablecoins: Backed by tangible assets such as gold (e.g., Pax Gold), these stablecoins serve as potential inflation hedges but face limited adoption due to liquidity and custody challenges.
Major Players Join the Stablecoin Race
Since the GENIUS Act’s passage, several prominent institutions have launched or announced stablecoin projects compliant with the new regulations.
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Anchorage Digital, the only federally chartered U.S. crypto bank, partnered with Ethena Labs to launch a stablecoin issuance platform aimed at bringing Ethena’s USDtb stablecoin under the domestic regulatory umbrella.
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WisdomTree, a Wall Street asset manager, debuted USDW — a dollar-backed stablecoin designed to facilitate dividend-paying tokenized assets, marking it as one of the first asset managers to enter the regulated stablecoin market.
Moreover, large banking institutions are actively exploring stablecoin issuance. Days before the GENIUS Act became law, Bank of America CEO Brian Moynihan announced plans to develop dollar-backed stablecoins pending full regulatory alignment. Similarly, JPMorgan and Citigroup have confirmed preparations to enter the stablecoin arena.
The Future of Stablecoins
The surge in market capitalization and institutional involvement signals a new era for stablecoins, underscored by enhanced regulatory oversight and growing confidence from traditional finance sectors. As banks and asset managers continue to innovate, questions around stablecoin design, transparency, and use cases remain at the forefront.
The GENIUS Act’s introduction appears to be a pivotal moment not only for stablecoins but for the broader cryptocurrency ecosystem—fostering legitimacy, innovation, and competition among an expanding range of market participants.
For ongoing updates on stablecoins, regulatory developments, and cryptocurrency markets, stay tuned to Cointelegraph.
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