By Wang Yinggui & Xue Qiuxia, Special Contributors to 21st Century Business Herald
Despite emerging signs of macroeconomic weakness in the United States, the stock market has reached unprecedented heights—a rally largely attributed to stablecoin momentum and reinforced expectations of Federal Reserve rate cuts.
Market Reaction to Legislative Breakthrough
The S&P 500 closed at 6,173.07 last Friday, setting a new all-time high. This surge occurred despite Q1 GDP contracting by 0.5%, persistent retail sales softness, and inflationary pressures. Two primary catalysts drove the momentum:
- Stablecoin sector exuberance following the Senate’s June 17 passage of the GENIUS Act (Guiding and Establishing National Innovation in USD Stablecoins).
- Strengthening investor confidence in impending Fed rate cuts.
Year-to-date, the S&P has gained 4.96%, with a 12.59% annual increase. The GENIUS bill—currently awaiting House approval—grants legal recognition to stablecoins, refocusing market attention on this crypto subsector.
Crypto Equities Outperform
- Circle (CRCL): +482% since June IPO (peaking at +864%)
- Coinbase (COIN): +43% in June
- PayPal (PYPL): +7.9% monthly gain
- Bitcoin: +10.6% YTD
Strategic Implications of the GENIUS Act
This legislation aims to fortify the USD’s global dominance amid growing fiscal deficits and credibility challenges. Key provisions include:
✅ Regulatory clarity for stablecoin issuance/redemption
✅ Bank participation in stablecoin services (with foreign issuer restrictions)
✅ Interest prohibition on transactional stablecoins
✅ Transparency mandates for reserve disclosures
Notably excluded: Algorithmic stablecoins and interest-bearing variants.
Global Stablecoin Competition Intensifies
While USD-pegged stablecoins currently command 99.81% market share (Tether: $157.6B | USDC: $61.7B), rivals like:
- EU’s digital euro initiatives
- UK/Singapore regulatory frameworks
- Asian financial hub developments
👉 How blockchain disrupts cross-border payments
Corporate Adoption Accelerates
Early movers are leveraging stablecoins’ cost efficiencies:
- Deutsche Bank data: $28T+ annual stablecoin transactions (exceeding Visa/Mastercard combined)
- JPMorgan’s JPM Coin processes $10T daily
- Retail giants (Walmart, Amazon) exploring blockchain payments
Table: Corporate Bitcoin Holdings as Strategic Reserve Assets
| Company | BTC Holdings | Use Case |
|---------------|-------------|---------------------------|
| MicroStrategy | 214,000 | Treasury reserve |
| Tesla | 48,000 | Payment system collateral |
Challenges & Next Steps
Despite potential to reduce remittance costs (currently 6.62% global average), stablecoins face:
⚠️ Volatility risks
⚠️ Regulatory gaps
⚠️ Illicit transaction concerns
The bill requires House passage and Presidential signature before the July 7-24 Congressional recess.
FAQ: US Stablecoin Legislation
Q: How does the GENIUS Act protect consumers?
A: Mandates reserve audits and issuer licensing to prevent fraudulent schemes.
Q: Can foreign companies issue USD stablecoins?
A: Yes, but with additional compliance requirements vs. domestic issuers.
Q: Why exclude algorithmic stablecoins?
A: Their non-collateralized design poses higher systemic risk.
Q: When might the Fed rate cuts occur?
A: Markets price in 1-2 cuts by Q4 2025 amid softening inflation.
👉 Stablecoin investment opportunities explained
This analysis excludes promotional content per editorial guidelines. All data sourced from public filings and World Bank reports.