Will the GENIUS Act Spark Another "DeFi Summer"?
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Will the GENIUS Act Spark Another "DeFi Summer"?
What do these latest developments in the global value transfer space mean?
Navigating Web3 tides with focused insightsBy: Blockchain Knight
Welcome to "Slate Sundays," a new weekly column by CryptoSlate featuring in-depth interviews, expert analysis, and thought-provoking commentary that goes beyond headlines to explore the ideas and voices shaping the future of cryptocurrency.
If 2024 was the "Year of the Dragon," then 2025 is undoubtedly the "Year of Stablecoins." In particular, dollar-backed digital assets have taken center stage—even earning recognition at the highest levels.
In March, a DeFi platform backed by the Trump family launched the World Liberty stablecoin USD1. In May, Vice President JD Vance delivered a keynote speech at the Bitcoin Conference, clearly stating the government's positive stance on stablecoins, calling them a "force multiplier for American economic strength"—a statement that electrified the audience.
Shortly after, stablecoin issuer Circle completed its $20 billion IPO, sparking what the Bankless podcast duo dubbed the "Summer of Stablecoins." Last week, the GENIUS Act was officially signed into law—the first U.S. legislation directly regulating digital assets—marking a turning point for global finance.
Even Jamie Dimon, personally skeptical of crypto, has joined the movement. While he publicly admits not understanding crypto’s appeal, his actions tell a different story: America’s largest bank has long been a pioneer in blockchain technology and has been developing its own stablecoin, JPM Coin, since 2019.
So, what do these latest developments mean for global value transfer? What impact will the GENIUS Act have on cryptocurrency, traditional finance (TradFi), and the future of the global economy? I’ve invited experts from technology, legal, and finance fields to unpack this and analyze the technological advances we may see in the coming years.
Core Summary: What Is the GENIUS Act?
If you've been living off-grid, let me bring you up to speed. The GENIUS Act stands for the "Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025," though “GENIUS” is much catchier. It's the first federal law in the U.S. to comprehensively regulate "payment stablecoins"—digital tokens pegged to fiat currencies.
The GENIUS Act establishes the long-awaited licensing and regulatory framework for stablecoin issuers, requiring full 1:1 reserve backing, implementing strict consumer protections, and laying a clear legal foundation for integrating stablecoins into mainstream financial systems.
The law also prohibits non-financial companies like Facebook and Google from issuing stablecoins without special authorization and imposes severe penalties for violations—up to $200,000 in daily fines and criminal penalties including up to five years in prison.
Why is the GENIUS Act so significant? Because for years, stablecoin issuers in the U.S. operated in regulatory gray zones marked by uncertainty. This act provides the first federal legal framework with defined operational standards. As international law firm Winston & Strawn LLP noted in a recent blog:
"The Act brings stablecoin issuers under a bank-like regulatory regime. For many businesses, this means hiring compliance officers, investing in risk management systems, and potentially partnering with experienced regulated entities to meet congressional requirements."
Utkarsh Ahuja, founder of fast-growing crypto investment fund Moon Pursuit Capital, shared his view on the breakthrough significance of the GENIUS Act:
"The GENIUS Act isn't just a major step forward for crypto—it's a pivotal moment for U.S. leadership in global finance. For the first time, we have clear rules for stablecoins, which are foundational to open, programmable monetary infrastructure. Regulatory uncertainty has long hindered industry growth, pushing developers overseas. This act changes that. It provides legal clarity for stablecoins and lays the groundwork for broader crypto adoption."
Genna Garver, partner at law firm Troutman Pepper Locke LLP, offered her perspective to CryptoSlate readers:
"This is a watershed moment for institutional financial services. The GENIUS Act authorizes fiat tokenization and associated regulation, effectively legitimizing the digital dollar."
A Perfect Storm for Digital Assets: Tailwinds Fully Engaged
Alchemy, a developer platform that processes over $100 billion annually in transactions for ecosystem companies—from Fortune 500 firms like Robinhood, Visa, JPMorgan Chase, and PayPal to crypto-native players like Coinbase and Circle—shared written comments from its CTO, Guillaume Poncin:
"The GENIUS Act delivers the long-awaited clarity institutions need, accelerating the legitimization of programmable money at internet speed. Its importance lies in reducing the regulatory uncertainty that has hindered institutional adoption."
Moreover, the GENIUS Act didn’t emerge in isolation. A surge of governmental support for digital assets has created a perfect storm. The rollback of restrictive policies from the Biden era—including the repeal of SAB 121, which barred U.S. banks from offering digital asset custody—has further fueled momentum. Poncin added enthusiastically:
"We’re already seeing large banks, previously cautious, express immediate interest. Now, with the GENIUS Act in place, we believe every major bank will issue or support stablecoins in some form. This ushers in a new era of programmable money—trusted, regulated, and built for internet-scale speed."
The act will also reinforce the dominance of the U.S. dollar, drive dollar-based innovation, and secure the dollar’s role as the world’s primary reserve currency for decades to come. Chris Perkins, president of crypto-native investment firm CoinFund, commented:
"The GENIUS Act will go down in history as the foundational law that propelled crypto into the mainstream. By catalyzing innovation around America’s most powerful export—the U.S. dollar—the act ensures the dollar remains the dominant global reserve currency, strengthens national security, and unlocks financial opportunities worldwide.
Stablecoins offer clear utility through low-cost, 24/7 payment services. Additionally, by providing seamless and efficient access to dollars for people in developing nations, they can serve as a store of value when local monetary policy fails."
Emergence of Stablecoin 'Killer Apps'
Stablecoins have evolved far beyond their original use case as a "store of wealth to avoid volatility in assets like Bitcoin and Ethereum" and are now recognized by landmark legislation as critical financial infrastructure. So, what key applications will the GENIUS Act unlock? What can we expect in the next few years? Ahuja commented:
"The GENIUS Act will unlock real innovation—real-time remittances, AI-native payments, and intermediary-free global trade."
Poncin added: "The opportunity with stablecoins isn't just holding them—unless earning yield in DeFi. The real potential lies in enterprises issuing their own stablecoins, such as payment processors integrating them or fintechs launching proprietary tokens.
We're seeing fintechs generate substantial revenue from managing funds in stablecoin reserves. With deposits in the $2–3 billion range, annual revenues could exceed $100 million. True value creation happens in how stablecoins enable new financial systems."
Beyond experimenting with issuing their own stablecoins, JPMorgan made headlines this week by allowing clients—especially institutional ones—to use Bitcoin as loan collateral. Thanks to the GENIUS Act, the bank is developing new programs enabling customers to pledge Bitcoin or Ether for cash loans, similar to using stocks or real estate as collateral.
While JPMorgan already allows borrowing via crypto ETFs, accepting direct crypto assets as collateral marks a paradigm shift—even more so coming from an institution led by one of the industry’s most vocal critics.
The impact of the GENIUS Act spans the entire industry, with DeFi platforms and tokenized RWAs drawing significant attention. Orest Gavryliak, Chief Legal Officer at DEX aggregation pioneer 1inch Labs, stated:
"Tokenization has become a core focus for traditional financial giants like BlackRock and JPMorgan because it dramatically optimizes existing financial standards while significantly enhancing liquidity accessibility. Leveraging blockchain technology, tokenization breaks geographical barriers, consolidating fragmented, illiquid markets and enabling real-time access to global, 24/7 multi-source liquidity."
Poncin elaborated: "Banks will offer customers 'institutional-grade opportunities' like private equity deals and borrowing against holdings. Small businesses will finally be able to leverage the remote work era to pay overseas employees affordably. We're about to witness not one, but hundreds of stablecoin 'killer apps' emerging—enabling value exchange and creation in ways unimaginable just months ago.
Tokenized Treasuries are growing rapidly. Stablecoin issuers like Tether hold significant U.S. debt. We're seeing rising market interest in tokenizing traditional illiquid assets like private credit and real estate to unlock liquidity. At the same time, infrastructure enabling RWA composability with DeFi protocols continues to evolve. Real innovation lies in making these assets programmable—spawning new financial products like automated lending based on tokenized assets or smart contracts interacting with real-world collateral."
Will the GENIUS Act Spark a 'Super Summer of DeFi'?
An interesting provision in the GENIUS Act bans paying interest or yield to stablecoin holders—a move that could trigger explosive demand for DeFi yield opportunities. Perkins explained:
"Under the GENIUS Act, stablecoins don't pay interest to end users, making them depreciating assets. Holders will seek yield—and that's where DeFi comes in. If the Treasury's projections are correct and trillions in stablecoins enter the market, we’ll see a 'Super Summer of DeFi' as users deploy diverse yield strategies to maximize returns. Yield-generating vaults will attract capital, and users will delegate AI agents to optimize returns.
With the U.S. reclaiming leadership, countries worldwide will need to accelerate their own stablecoin policy reforms. The $7.5 trillion daily forex market stands to benefit. Watch this space closely."
Will Beeson, founder of MultiLiquid and former co-lead of Standard Chartered’s tokenization platform, commented: "A complete ban on stablecoin yields marks a critical turning point. Capital is already shifting. Ethereum is outperforming Bitcoin as traders seek returns through Ethereum-native protocols and tokenized funds.
The stablecoin market is entering a new phase where only institutions capable of efficiently deploying capital will survive. But there's a bottleneck: stablecoins operate 24/7, but Treasuries don’t. Bridging this gap in liquidity infrastructure is now paramount."
Gavryliak added: "The regulatory clarity brought by the GENIUS Act enables businesses and institutions to use stablecoins for fast, low-cost cross-border payments, treasury optimization, and real-time settlement—bypassing traditional banking channels and unlocking operational efficiency. This is a positive development for DeFi.
It also provides assurance for institutions and other TradFi participants to fully commit. Entities that previously dipped their toes can now dive in under a clear regulatory framework."
Can Politics Halt This Revolution?
As digital assets grow increasingly partisan—with figures like Democrat Elizabeth Warren still leading anti-crypto efforts—is there a risk the GENIUS Act or related legislation could be repealed if Democrats regain power? Also, given the Trump family’s clear financial stake in digital assets, does this apparent conflict of interest pose a threat? Poncin believes it’s too late:
"Momentum for crypto adoption transcends political divides. We work with institutions across sectors—all recognizing the potential of blockchain. The repeal of SAB 121 had bipartisan support, and there are pro-crypto voices in both parties. Major banks, asset managers, and payment firms are investing in blockchain because it offers superior technology for settlement and programmable money.
Beyond that, the crypto industry has demonstrated resilience amid challenges for years. The key is that real utility is being built on blockchains—applications solving real problems like settlement speed, operating costs, and 24/7 availability. That’s what drives lasting adoption."
Garver is also optimistic about the lasting change brought by the GENIUS Act: "During the legislative process, multiple attempts were made to debate conflicts of interest and propose amendments—but none were included in the final bill. Now that final legislation permitting payment stablecoins is in place, adoption will likely depend more on use cases.
Like the adoption of ATMs in the previous generation, when a technology becomes convenient and beneficial enough, people embrace it. I don’t think potential users will stay on the sidelines due to protests. I believe the trend is irreversible—crypto will rapidly integrate into the core of the U.S. economy, global finance, and financial services."
Facing global debt expansion, liquidity growth, geopolitical uncertainty, and falling interest rates, the U.S.’s favorable regulatory stance on digital assets suggests "this train is unstoppable." As Ahuja emphasized:
"Frankly, from event-driven risks like tariff disputes or escalating Middle East tensions, this is about as constructive a macro environment as you could ask for. But purely from a market structure and liquidity standpoint, conditions are ripe.
We’re entering a rare window where fundamentals, liquidity, and macro dynamics align perfectly—precisely the moment to unlock maximum upside potential."
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