Stablecoins are on the verge of going mainstream, analysts say, as a landmark regulatory bill makes its way through Congress. The Senate is deliberating the GENIUS Act, which would provide a framework for regulating stablecoins. The bill last week passed a major procedural hurdle in the Senate after initial resistance from some Democrats. Stablecoins are a type of crypto asset that is tied to the value of another currency, such as the US dollar or gold. They were initially created as a way for crypto investors to store their money but have grown in popularity in recent years for their use in digital payments. The landmark bill would provide a boost of legitimacy to the crypto industry and is another example of how cryptocurrencies have had a major revival under President Donald Trump’s second term. Proponents of crypto have welcomed the focus on advancing stablecoin regulations. Yet critics have pointed to the Trump family’s ties to the crypto industry: For example, World Liberty Financial, a company tied to the Trump family, has issued its own stablecoin. “Stablecoins seem (to be) here to stay,” analysts at JPMorgan Chase said in an April note. “A few years ago, we probably would have debated the accuracy of that sentence. Not today.” How do stablecoins work? While cryptocurrencies are known for being volatile and fluctuating in value, stablecoins are supposed to be, as their name suggests, stable. This is because stablecoins are pegged one-to-one to another asset. They are most often linked to the US dollar, making one stablecoin worth $1. Companies that issue stablecoins hold other assets to back their coins and assure buyers about their value. For example, a company issuing stablecoins pegged to the US dollar could buy and hold high-quality assets like US government bonds. Two of the major stablecoin issuers are Tether, which issues USDT, and Circle, which issues USDC — and both of these stablecoins are pegged one-to-one to the dollar. Tether accounts for 62% of the total stablecoin market, according to analysts at Deutsche Bank. Rise of stablecoins The total market value of stablecoins surged from $20 billion in 2020 to $246 billion in May 2025, according to analysts at Deutsche Bank. Stablecoins emerged in 2014 as way for crypto investors to park their money while buying and selling other more volatile cryptocurrencies like bitcoin. Since then, Stablecoins have ballooned in popularity particularly for their potential use in digital payments, said Darrell Duffie, a professor of finance at Stanford University. Stablecoins, given their stable value, can serve as a medium of exchange and function as a digital currency. The crypto coins have emerged as useful in helping speed up payments. “Cross-border payments are providing the most exciting new use cases,” Duffie said. “Making a payment, such as a remittance or a vendor payment to or from an emerging-market country, can now be made faster and at lower cost than a conventional correspondent banking payment.” Risks While stablecoins are significantly less volatile than other crypto coins, they are not without risks. If the assets backing the coin drop in value and the one-to-one peg falls apart, it could cause the equivalent of a bank run, said Duffie. Stablecoins gained notoriety in 2022 when TerraUSD, an obscure type of coin called an algorithmic stablecoin, crashed in value and caused a panic among investors. There are also security risks like people forgetting the pass-code to their crypto wallet. Significance of the GENIUS Act The GENIUS act stands for “Guiding and Establishing National Innovation for U.S. Stablecoins of 2025.” Circle would likely benefit from increased regulation more than Tether as Circle is a US-based company while Tether is based in El Salvador, Del Wright, a professor at Louisiana State University Law School who specializes in crypto, told CNN. If the legislation passes, it could usher in mainstream adoption of stablecoins for digital payments and spur growth in the stablecoin industry, said Christian Catalini, founder of the cryptoeconomics lab at MIT. He added that traditional Wall Street firms and startups would also compete to offer stablecoins. Visa (V) in May announced a partnership with Bridge, a stablecoin company owned by fintech startup Stripe, to enable payments using stablecoin in countries across Latin America. “Stablecoins are on the cusp of mainstream adoption in 2025 as the US pushes forward with landmark legislation,” analysts at Deutsche Bank said in a May note. Despite the resistance in the Senate, “we still expect progress this year.”
What are stablecoins? Everything to know about the crypto being debated in Congress
TruthLens AI Suggested Headline:
"Senate Considers GENIUS Act to Regulate Stablecoins Amid Growing Popularity"
CNN
7.8
TruthLens AI Summary
Stablecoins are gaining traction as a significant player in the financial landscape, driven by a landmark regulatory bill known as the GENIUS Act, which is currently under consideration in the U.S. Senate. This act aims to establish a regulatory framework for stablecoins, which are digital assets pegged to traditional currencies like the US dollar or commodities such as gold. The recent progress of the bill, which overcame initial opposition from some Democrats, signals a potential shift towards mainstream acceptance of stablecoins. Analysts from JPMorgan Chase have noted that the stability of these assets, which are designed to maintain a consistent value, positions them as a viable option for digital payments. The increased focus on regulatory measures is seen as a means to lend legitimacy to the cryptocurrency sector, which has experienced a resurgence during President Donald Trump’s administration. However, critics have raised concerns about the connections between the Trump family and the crypto industry, particularly with companies like World Liberty Financial, which has launched its own stablecoin.
The rise of stablecoins has been remarkable, with their market value ballooning from $20 billion in 2020 to an estimated $246 billion by May 2025. Initially created to provide a stable repository for crypto investors to manage their assets, stablecoins have evolved into a practical tool for facilitating digital transactions. Their inherent stability allows them to serve as a medium of exchange, particularly in cross-border payments, which can now be executed more swiftly and cost-effectively than traditional banking methods. Nevertheless, stablecoins are not without their risks; issues such as the potential devaluation of the assets backing them could lead to significant financial instability, reminiscent of the 2022 crash of TerraUSD. The GENIUS Act, if passed, could catalyze further growth in the stablecoin market while simultaneously inviting traditional financial institutions to enter the space, enhancing competition and innovation in digital payments. As the legislative process unfolds, experts anticipate that stablecoins will become increasingly integrated into everyday financial transactions by 2025.
TruthLens AI Analysis
The article highlights the growing significance of stablecoins amid ongoing legislative efforts in Congress, particularly with the introduction of the GENIUS Act. This act aims to establish a regulatory framework for stablecoins, positioning them for mainstream adoption. The piece reflects the evolving landscape of cryptocurrencies, emphasizing both their potential and the controversies surrounding them, especially concerning political ties.
Implications of the Legislative Framework
The GENIUS Act's progress in Congress suggests a recognition of stablecoins' role within the financial system. By seeking to regulate these digital assets, lawmakers aim to provide clarity and security, which could encourage wider acceptance among consumers and businesses. This move could signify a shift in how cryptocurrencies are perceived, potentially elevating their status in traditional financial markets.
Public Perception and Concerns
The article presents a balanced view, acknowledging support for stablecoin regulation while also pointing out criticism related to political connections, particularly those of the Trump family. This duality may create skepticism among certain audiences, fostering a narrative that stablecoins could be leveraged for private gain rather than public benefit.
Hidden Narratives
There may be an underlying intent to draw attention to the political affiliations of cryptocurrency proponents, possibly to sway public opinion against the legitimacy of stablecoins. The mention of the Trump family's involvement, particularly through World Liberty Financial, suggests an attempt to frame the narrative around political influence within the crypto space, which might distract from the broader discussion of stablecoin technology and its implications.
Manipulative Elements
The article may exhibit a degree of manipulation by emphasizing the political connections of individuals involved in the crypto space, thereby potentially undermining the objective merits of stablecoins. The choice of language and the focus on the Trump family's ties could lead readers to question the integrity of the stablecoin market, affecting their perceptions beyond the facts presented.
Credibility Assessment
Overall, the article appears credible as it presents factual information about stablecoins and the legislative process. However, the inclusion of politically charged commentary necessitates caution. Readers should consider the implications of the political context when evaluating the news.
Target Audience
The article likely aims to engage a wide array of audiences, from cryptocurrency enthusiasts to skeptics concerned about regulation and political influence. By addressing both sides of the debate, it attempts to resonate with individuals who are either supportive of or wary about the mainstreaming of stablecoins.
Market Impact
The news surrounding the GENIUS Act could have significant implications for financial markets, particularly those related to cryptocurrency exchanges and companies involved in stablecoin issuance. Stocks of firms that are directly associated with stablecoin issuance or that stand to benefit from increased regulation may experience fluctuations in response to this news.
Geopolitical Context
From a global perspective, the discussion around stablecoins and their regulation ties into broader issues of financial sovereignty and digital currency adoption by governments. As countries grapple with the implications of cryptocurrencies, this legislative effort in the U.S. may influence similar discussions in other jurisdictions.
Use of Artificial Intelligence
While the article does not explicitly indicate the use of AI in its creation, it is possible that AI tools were employed in drafting or editing to streamline the information. Such technology could have influenced the clarity and coherence of the arguments made, especially in framing the narrative around stablecoins and their regulation.
In conclusion, while the article provides informative content about stablecoins and their regulatory landscape, readers should be aware of the underlying political narratives that may influence public perception. The emphasis on political ties could detract from the broader technological and economic discussions surrounding stablecoins and their potential impact on the market.