Where is the next "battleground" after the stablecoin bill takes effect?
TechFlow Selected TechFlow Selected
Where is the next "battleground" after the stablecoin bill takes effect?
The total market cap of stablecoins reached $269.696b (approximately 269.7 billion USD), an increase of $2.606b (approximately 26 billion USD) week-on-week.
Navigating Web3 tides with focused insightsAuthor: Cobo
Since the GENIUS Act took effect, market reactions have been unexpected:
-
USDT supply surged逆势 by tens of billions of dollars, while USDC, which emphasizes compliance, saw limited short-term growth.
-
Against the backdrop of a "stablecoin interest ban," yield-bearing stablecoins rapidly expanded by exploiting regulatory loopholes: USDe supply surged, Coinbase and PayPal rebranded yields as "rewards," Coinbase even launched an "embedded rewards SDK," and Anchorage partnered with Ethena Labs to build institutional-grade compliant yield channels using tokenized assets like BlackRock's BUIDL.
-
Privacy has become a new focus: ZKP and DID can offer institutions "compliance verification without information disclosure" solutions, alleviating privacy concerns for enterprises entering the stablecoin space.
Market Overview & Growth Highlights
Total stablecoin market cap reached $269.696b (approximately 269.7 billion USD), up $2.606b (about 26 billion USD) week-on-week. In terms of market share, USDT maintains its dominant position at 61.25%; USDC ranks second with a market cap of $64.502b (approximately 64.5 billion USD), representing 23.92% of the total.
Blockchain Network Distribution
Top three networks by stablecoin market cap:
-
Ethereum: $135.786b (135.8 billion USD)
-
Tron: $82.995b (83 billion USD)
-
Solana: $11.431b (11.4 billion USD)
Top 3 networks with fastest weekly growth:
-
Berachain: +96.57% (USDT占比 43.15%)
-
XRPL: +49.84% (RLUSD占比 49.11%)
-
Sei: +47.95% (USDC占比 85.96%)
Data from DefiLlama
🎯 U.S. Bank Secrecy Act and Privacy Requirements for Stablecoin Payments
After the U.S. stablecoin legislation passed, privacy has become the next focal point for both regulators and the market.
As stablecoin market cap exceeds 270 billion USD and rapidly integrates into mainstream payment systems, the blockchain’s “full transparency” is revealing new issues. Since every transaction on public chains is permanently visible, companies effectively expose their complete financial history, supply chain data, and payroll structures. While this may be a mere annoyance for retail users, it is an unacceptable barrier for enterprises and institutions. This means competitors can track every payment in real time. If unresolved, this will severely limit stablecoin adoption in commercial payments and institutional settlements.
If privacy remains a concern, stablecoin penetration in commercial and institutional payments will stall. Coinbase Chief Legal Officer Paul Grewal recently wrote that for laws like the GENIUS Act to work, the Bank Secrecy Act must be simultaneously upgraded. The current model is inefficient, centralizes sensitive data into hacker-targeted “honeypots,” and delivers suboptimal anti-money laundering outcomes.
Grewal emphasized that privacy and security are not a zero-sum game. Technologies like Zero-Knowledge Proofs (ZKP) and Decentralized Identity (DID) now enable “compliant verification without exposing raw data,” allowing institutions to see only verification results rather than full datasets—striking a balance between data minimization and precise regulation. He urged the U.S. Treasury to lead a public-private collaboration mechanism, prioritizing rapid integration of ZKP into compliant processes, focusing monitoring on key data points of suspicious transactions, and enhancing screening efficiency with AI risk models. This approach would protect privacy without sacrificing regulatory precision, clear the biggest hurdle for institutional stablecoin adoption, and give the U.S. an edge in digital asset institutionalization and globalization.
🎯 Yield Economics of Stablecoins Under the U.S. Interest Ban
Regulatory restrictions often spur unexpected innovation. For example, the GENIUS Act prohibits stablecoin issuers from paying interest to users, originally intended to curb high-risk behavior, but inadvertently triggered explosive growth in yield-bearing stablecoins. Since the law passed, products like Ethena's USDe have increased supply by tens of billions of dollars, deriving yield from exchange funding rates rather than Treasuries, successfully bypassing legal restrictions.
In this regulatory gray area, Coinbase and PayPal restructured stablecoin returns as “rewards,” circumventing issuer-specific limitations in regulations. As a USDC distributor, Coinbase returns Circle’s earnings to users; PayPal uses Paxos to isolate issuer risks while continuing to offer 4.5% annualized returns. Anchorage and Ethena Labs have even linked stablecoin yields to tokenized assets like BlackRock’s BUIDL, building institutional-grade compliant yield channels.
Paying holders interest has become a key strategy in mature and emerging markets to attract capital. Coinbase has even API-ified “interest rewards” via embedded wallet SDKs, lowering the barrier for developers to integrate annualized yield features. In high-inflation regions like Latin America, Slash’s USDSL offers 4.5% annual rewards, combining dollar-denominated asset stability to quickly draw capital inflows. Stablecoins are using increasingly sophisticated and compliant financial engineering to efficiently pass through underlying asset returns, reshaping user relationships and value distribution models.
🎯 Key Takeaways From Hong Kong’s Enacted Stablecoin Ordinance — Transparency and End-to-End Regulation
Hong Kong’s Stablecoin Ordinance has officially taken effect, sparking broad discussions about mandatory KYC, overseas stablecoin policies, and DeFi compatibility. In fact, the core of this regulation is not a “complete ban,” but control over stablecoins issued in Hong Kong or denominated in HKD, especially those related to RMB-linked tokenized assets. Overseas stablecoins like USDT and USDC are not directly restricted in secondary market circulation. Hong Kong’s strategy is clear: control issuance at the source, apply high-barrier regulation to high-value use cases such as RMB asset tokenization and offshore RMB stablecoins, shaping “quasi-sovereign settlement tools” to differentiate from the U.S.-driven model and EU-wide standards.
The ordinance’s keywords are transparency and end-to-end regulation. Strict standards are set across the entire lifecycle—from issuance, custody, clearing, to distribution—with extremely high licensing thresholds. Downstream custody, distribution, and clearing also require compliance. Banks, payment institutions, and on-chain infrastructure providers will be integrated into a unified framework, shifting the distribution ecosystem from “open access” to “permissioned access.” In this landscape, infrastructure providers with MPC wallets, on-chain compliance, and capital risk management capabilities will become key partners for banks and tech giants.
Strict regulation also brings new industry challenges. Issuers must bear ultimate compliance responsibility for downstream ecosystems (including third-party custody, distribution, clearing). Any participant entering this ecosystem must meet dual technical and institutional compliance requirements. This forces the industry toward specialization and creates significant opportunities for infrastructure suppliers. For instance, technology infrastructure providers must offer multi-sig, MPC, HSM-based shared control mechanisms and MPC wallet technologies to elevate private key security to a foundation of trust, balancing asset sovereignty with traceable legal accountability. Such technical solutions transform wallets from simple backend tools into gateways of compliant security systems.
Market Adoption
🌱 JPMorgan: Growth in DeFi and Asset Tokenization Still “Disappointing”
Key Takeaways
-
Total Value Locked (TVL) in DeFi has not yet recovered to 2021 highs, with primary participants still retail investors and crypto-native firms; traditional institutions remain largely absent;
-
Global tokenized asset market size is only about 25 billion USD, described by analysts as “insignificant”; over 60 tokenized bonds have been issued with a total value of 8 billion USD, but secondary market trading is nearly nonexistent;
-
Institutional adoption faces three major barriers: lack of coordinated cross-border regulation, unclear legal status of on-chain investments, and insufficient safeguards for smart contract execution and protocol security.
Why It Matters
-
This report reveals a disconnect between actual applications and market hype in DeFi and tokenization. Despite improving infrastructure and the emergence of KYC-compliant vaults and permissioned lending pools, traditional financial institutions remain cautious. The report notes that the traditional financial system, driven by fintech, is evolving toward faster, lower-cost settlement and payments—potentially undermining the necessity of blockchain systems—and suggests the crypto industry must develop more compelling institutional-grade use cases.
🌱 Remitly Adopts Stablecoin Technology to Optimize Cross-Border Payments, Launching Multi-Currency Digital Wallet Service
Key Takeaways
-
Remitly will launch a multi-currency “Remitly Wallet” in September, supporting fiat and stablecoin storage, particularly targeting users in countries with high inflation or currency volatility;
-
The company is partnering with Stripe’s Bridge to offer stablecoin payout options to users in over 170 countries, expanding its existing fiat payment network;
-
Remitly has already integrated USD-pegged stablecoins like USDC into internal financial operations, enabling 24/7 fund flows, reducing pre-funded capital needs, and improving capital efficiency.
Why It Matters
-
This marks a mainstream cross-border payment company beginning large-scale adoption of stablecoin technology. By integrating stablecoins into core operations, Remitly not only provides a value preservation solution for users in high-inflation regions but also addresses liquidity challenges faced by traditional remittance systems. This innovative model will accelerate stablecoin adoption in real-world payment scenarios, offering hundreds of millions globally who rely on cross-border financial services more efficient and lower-cost solutions—especially in markets with limited financial infrastructure.
🌱 Tether CEO: 40% of Blockchain Fees Come From USDT Transfers
Key Takeaways
-
Tether CEO Paolo Ardoino tweeted that 40% of global blockchain fees are used for USDT transfers, covering nine major public chains;
-
In emerging markets, hundreds of millions of users daily use USDT to hedge against local currency depreciation and inflation, making it one of the most active blockchain applications;
-
In crypto contexts, “trading” usually refers to buying, selling, swapping, or arbitrage activities on exchanges. These typically occur within exchange internal systems or liquidity pools and do not always generate independent on-chain transfer fees. When a USDT transfer occurs on-chain and incurs a fee, it usually means funds are moving between different addresses or wallets—this can be categorized as “actual usage” rather than pure speculation.
Why It Matters
-
This data highlights USDT as the dominant application in the blockchain ecosystem, far surpassing other use cases. Paolo predicts future blockchain competition will center on gas fee optimization and USDT transaction cost efficiency, reflecting how stablecoins have evolved from mere mediums of exchange into key solutions for real-world financial needs—especially in economically unstable regions. This phenomenon also proves blockchain technology is playing a substantive role in financial inclusion.
Macro Trends
🔮 Mizuho: Coinbase Q2 Earnings Show Circle’s USDC Profit Margins Shrinking
Key Takeaways
-
Mizuho analysts estimate Circle earned approximately $625 million in interest income from USDC reserves in Q2, of which $332.5 million was paid to Coinbase;
-
With new distribution partners like Binance joining, analysts believe Circle’s net reserve income margin will face greater pressure, as distribution costs are structurally high and rising;
-
Following passage of the GENIUS Act, JPMorgan and Bank of America are preparing to launch their own stablecoins, intensifying competition in the USD stablecoin market.
Why It Matters
-
Despite strong IPO performance, Mizuho maintains a “underperform” rating and $85 price target, arguing the market underestimates risks facing USDC. As Circle expands its distribution network, the previously Coinbase-exclusive profit-sharing model is breaking down, potentially weakening Circle’s profitability. Combined with expectations of falling interest rates and traditional banks entering the space, USDC’s competitive advantage is being challenged—impacting the entire stablecoin market structure.
🔮 U.S. Treasury Sets Record by Expanding Short-Term Treasury Issuance, Stablecoins Emerge as New Buyers
Key Takeaways
-
The U.S. Treasury will auction $100 billion in four-week Treasury bills—a record high, up $5 billion from the previous auction—while maintaining eight-week and seventeen-week bill volumes;
-
Short-term Treasury yields exceeding 4% have attracted significant investor interest, with $16.7 billion flowing into short-term Treasury ETFs in Q2, doubling year-on-year;
-
The Treasury Borrowing Advisory Committee noted that “rising stablecoin issuance” has become a new source of demand for Treasuries, as the GENIUS Act requires stablecoin issuers to hold safe assets like Treasuries.
Why It Matters
-
The Trump administration clearly favors short-term financing, with Treasury Secretary Bethune believing long-term debt issuance is too costly under current rate conditions. Stablecoin demand has become a key variable in the T-bill market, as regulatory requirements compel stablecoin issuers to hold safe assets, creating new structural buying pressure. Meanwhile, global central banks are reducing dollar holdings in favor of gold, with U.S. banks forecasting gold prices could exceed $4,000, reflecting growing market concerns over U.S. debt sustainability.
🔮 Yield-Bearing Stablecoin Supply Surges Since GENIUS Act Passage
Key Takeaways
-
Since the GENIUS Act was signed on July 18, revenue-generating stablecoin USDe from Ethena has grown supply by 70% to $9.49 billion, becoming the third-largest stablecoin by market cap;
-
Sky’s USDS saw supply grow 23% to $4.81 billion during the same period, ranking fourth by market cap; these stablecoins provide holder yields through staking mechanisms;
-
Current annualized staking yields are 10.86% for USDe and 4.75% for USDS. Considering the U.S. June inflation rate of 2.7%, real yields stand at 8.16% and 2.05%, respectively.
Why It Matters
-
The GENIUS Act bans stablecoin issuers from directly providing yield to holders, inadvertently fueling explosive growth in stakable stablecoins. Investors are turning to stablecoins that offer yield through native protocol staking mechanisms to bypass regulatory limits. The overall stablecoin market has grown from $205 billion to $268 billion this year, with analysts predicting it could approach $300 billion by year-end. This shows that despite tighter regulation, demand for high-yield dollar alternatives remains strong, driving a new wave of DeFi innovation and adoption.
New Product Updates
👀 Former Apple Engineer Launches Privacy-Focused Crypto Visa Card Payy
Key Takeaways
-
Payy Visa card uses zero-knowledge proofs (ZKP) and a proprietary blockchain to enable private payments, ensuring user stablecoin transaction amounts are not publicly visible on-chain;
-
Developed by Polybase Labs, founded by former Apple iOS engineer Sid Gandhi, the project took three years to build, balancing transaction privacy with regulatory compliance;
-
Payy is designed for everyday users, emphasizing simplicity and ease of use, allowing people unfamiliar with blockchain to self-custody and use stablecoins seamlessly.
Why It Matters
-
Payy addresses two key pain points in crypto payments: transaction privacy and usability. Traditional blockchain payment solutions expose user transaction records on public chains, whereas Payy achieves transaction privacy while remaining compliant. This represents a major step toward mainstream adoption of crypto payments, offering a viable daily payment solution for self-custodied stablecoins and positioning itself as a true alternative to traditional banking systems.
👀 MetaMask May Partner With Stripe to Launch Stablecoin mmUSD
Key Takeaways
-
An accidentally published Aave governance proposal revealed that MetaMask is collaborating with payments giant Stripe to launch a USD-pegged stablecoin mmUSD, with support from the M^0 platform;
-
The proposal indicates mmUSD will serve as the “cornerstone asset” of the MetaMask ecosystem, natively integrated across all its services including wallet, trading, buying, and earning;
-
The proposal was quickly deleted, with Aave Chan Initiative founder Marc Zeller confirming its authenticity but stating the timing was “premature.”
Why It Matters
-
This marks another tech giant entering the stablecoin market after PayPal and Robinhood. MetaMask, one of the largest crypto wallets, partnering with top-tier payment processor Stripe to launch a stablecoin could accelerate integration of stablecoins across Web3 and traditional payment systems.
👀 Coinbase Launches Embedded Wallet Toolkit, Simplifying Web3 User Onboarding for Developers
Key Takeaways
-
Coinbase added the Embedded Wallets SDK tool to its developer platform (CDP), enabling developers to seamlessly integrate self-custody wallet functionality into apps;
-
The SDK includes built-in features like cryptocurrency on-ramps, token swaps, and 4.1% annualized yield on USDC, aiming to eliminate trade-offs between user experience and self-custody risks;
-
Unlike traditional wallets, users can log in directly via email, SMS, or OAuth—no browser extensions or seed phrase memorization required—greatly simplifying onboarding.
Why It Matters
-
This reflects a strategic move by Coinbase in its Web3 infrastructure roadmap, lowering development barriers to drive mass application adoption. Running on the same system supporting Coinbase DEX, the new tool offers enterprise-grade security while addressing one of crypto’s biggest hurdles: complex user onboarding. This aligns with Coinbase’s broader strategy of transforming its wallet into a super app, further solidifying its role as a bridge between crypto and traditional internet.
👀 U.S. Digital Bank Slash Launches Stablecoin via Stripe Bridge, Enabling Non-U.S. Firms to Easily Send and Receive USD and Stablecoins
Key Takeaways
-
San Francisco-based digital bank Slash launched USDSL, a USD-pegged stablecoin issued via Stripe’s Bridge platform;
-
The stablecoin aims to give businesses USD payment capabilities without requiring a U.S. bank account, reducing settlement times and foreign exchange fees;
-
This launch coincides with the signing of the GENIUS Act into law, which provides a regulatory framework for the U.S. stablecoin industry and issuers.
Why It Matters
-
With clearer stablecoin regulation, fintech firms are accelerating entry into the space. Slash’s use of Stripe’s Bridge to issue a stablecoin represents a new trend of convergence between traditional finance and crypto technology, potentially solving efficiency and cost issues in cross-border payments. It also signals that with clearer regulatory clarity, stablecoin applications in commercial payments are moving from concept to practice.
👀 Trump-Linked Project World Liberty Launches USD1 Stablecoin Loyalty Program
Key Takeaways
-
World Liberty Financial, a DeFi project backed by the Trump family, announced a USD1 loyalty program similar to airline miles, initially partnering with exchanges like Gate;
-
Users can earn points by trading USD1 trading pairs, holding USD1 balances, staking USD1 for yield, using approved DeFi protocols, and interacting with the WLFI mobile app;
-
Launched in April, the USD1 stablecoin claims full backing by short-term U.S. Treasuries, dollar deposits, and other cash equivalents, issued by BitGo Trust Company.
Why It Matters
-
Trump and his three sons serve as ambassadors or advocates for World Liberty Financial, raising concerns about potential conflicts of interest. The USD1 loyalty program, combining stablecoins with reward incentives, represents a new direction for stablecoin projects seeking user retention in an increasingly competitive environment, reflecting closer ties between government figures and the crypto industry.
👀 JPMorgan Launches On-Chain Intraday Repo Solution Based on Kinexys Blockchain
Key Takeaways
-
JPMorgan, together with HQLA-X and Ownera, launched a “cross-digital ledger solution” allowing repo dealers to exchange funds and securities via blockchain deposit accounts on the Kinexys network;
-
The tool supports full lifecycle management of repo trades—from execution and collateral management to settlement—with minute-level precision in settlement and maturity timing;
-
The first phase of the solution can already handle up to $1 billion in daily trading volume, designed as an industry-grade platform scalable to multiple trading venues, collateral sources, and digital cash instruments.
Why It Matters
-
JPMorgan is leading blockchain innovation in traditional banking, with Kinexys (formerly Onyx) becoming central to its digital asset strategy. The platform could support deposit tokens, stablecoins, and CBDCs, reducing market fragmentation. As JPMorgan rolls out JPMD, a stablecoin-like asset, and partners with Coinbase, this move signifies Wall Street’s recognition of blockchain technology is transitioning from experimentation to real-world application, setting new standards for institutional-grade digital asset infrastructure.
Regulation & Compliance
🏛️ Paxos Fined $48.5 Million by NY Regulators Over Binance BUSD Partnership
Key Takeaways
-
Paxos Trust Company will pay $26.5 million in fines to the New York Department of Financial Services (NYDFS) and invest an additional $22 million to improve its compliance program;
-
Regulators found that when Paxos partnered with Binance in 2018 to issue the BUSD stablecoin, it failed to conduct adequate due diligence on its partner and had deficiencies in anti-money laundering procedures;
-
Paxos accepted Binance’s claim that it had “fully restricted U.S. users” without independent verification; NYDFS ordered Paxos to stop minting BUSD in 2023.
Why It Matters
-
This penalty highlights regulators’ strict scrutiny of stablecoin issuers’ partnerships, especially with offshore exchanges. Although Paxos stated these issues were identified and fully resolved over two years ago, the case serves as a wake-up call for the entire stablecoin industry, reminding issuers to conduct rigorous due diligence and establish robust compliance frameworks. With the implementation of the GENIUS Act and expansion of the stablecoin market, regulatory scrutiny of issuers will intensify, potentially exposing those partnered with problematic exchanges to greater legal risks.
🏛️ Trump Signs Executive Order Halting Banks’ “Unfair Practices” Against Crypto Firms
Key Takeaways
-
President Trump signed an executive order banning federal regulators from imposing extra oversight on banks serving crypto firms based on “reputational risk”;
-
The order aims to end “Operation Choke Point 2.0,” preventing banks from denying services to crypto companies based on political motives or subjective concerns about high-risk industries;
-
The Federal Reserve, OCC, and FDIC have committed to no longer considering “reputational risk” when evaluating bank customer relationships; House Financial Services Chair Hill and Senator Lummis expressed support.
Why It Matters
-
This executive order fundamentally removes a subjective regulatory tool, forcing banks to make decisions based on actual legal and financial risks rather than vague reputational concerns. It firmly establishes the crypto industry’s legitimacy, ensuring equal access to banking services like any other sector. Against a backdrop of proactive regulatory reform, this move will reshape bank-crypto relationships and deepen integration between traditional finance and digital assets.
Capital Moves
💰 Tether Acquires Stake in MiCA-Licensed Exchange Bit2Me, Leads $32.7M Funding Round
Key Takeaways
-
Stablecoin issuer Tether acquired a minority stake in Spanish crypto exchange Bit2Me and led a €30 million ($32.7 million) funding round, with the deal expected to close in the coming weeks;
-
Bit2Me is the first Spanish-language exchange licensed under the EU’s MiCA framework, with its Crypto Asset Service Provider (CASP) license enabling services across 27 EU member states;
-
This investment will fund Bit2Me’s expansion in the EU and Latin America (starting with Argentina); founded in 2014, the exchange currently serves 1.2 million users.
Why It Matters
-
This is a strategic move by Tether to reestablish its position in Europe amid tightening MiCA regulations. As several exchanges have delisted or deprioritized USDT over the past year, Tether is investing in licensed exchanges to create compliant market channels for its stablecoin. This demonstrates how Tether leverages its massive profits (a record $4.9 billion last quarter) for strategic investments to expand globally across diverse regulatory environments.
💰 Ripple to Acquire Stablecoin Payment Platform Rail for $200 Million
Key Takeaways
-
Ripple announced the acquisition of stablecoin payment platform Rail for $200 million, expected to close in Q4 2025;
-
Rail is projected to process over 10% of global stablecoin payments in 2025, in a market valued at around $36 billion;
-
The acquisition will allow Ripple to offer enterprise-grade stablecoin payment solutions supporting multiple digital assets like RLUSD and XRP, with customers able to use on/off ramps without holding crypto.
Why It Matters
-
This is Ripple’s latest major investment following its $1.25 billion acquisition of crypto-friendly broker Hidden Road in April, signaling accelerated expansion into the stablecoin market. As Ripple actively seeks MiCA licensing in the EU and RLUSD gains regulatory approval in the Dubai International Financial Centre, the company is expanding its stablecoin footprint globally. This move transforms Ripple from a primarily cross-border payment provider into a comprehensive financial services platform, reflecting intensifying competition in institutional stablecoin services.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Cobo
