The GENIUS Act Killed Yield-Bearing Stablecoins. That Might Save DeFi
2025-07-15 18:03:04
Main Idea
The GENIUS Act aims to regulate stablecoins by banning yield-bearing features, which could reshape DeFi by integrating it more closely with traditional financial systems and U.S. debt markets.
Key Points
1. The GENIUS Act will require stablecoins to meet rigorous standards like segregated reserves and high-quality liquid assets, potentially disqualifying 85% of current stablecoins.
2. Yield-bearing stablecoins are now classified as non-compliant, ending the ambiguity around their regulatory status.
3. The Act mandates that stablecoin reserves be held in short-term U.S. Treasury bills, integrating DeFi with the $28.7 trillion U.S. debt market.
4. By eliminating yield-bearing stablecoins, the GENIUS Act may shift DeFi's focus from high APY promises to compliance and transparency.
5. The Act could stabilize DeFi by aligning it with traditional financial systems, though it may also force some projects out of compliance.
Description
Congress may pass the most consequential crypto law of the decade this week while drawing a bright red line through one of DeFi’s murkiest gray areas: yield-bearing stablecoins. At first glance, the GENIUS Act appears to be a straightforward regulatory win. It will finally grant over $120 billion in fiat-backed stablecoins a legal runway, establishing clear guardrails for what qualifies as a compliant payment stablecoin. But dig into the details and it becomes clear this isn’t a broad green ligh...
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