The recent passage of the Senate’s GENIUS Act and House’s upcoming “Crypto Week” mark a seismic shift in the financial world. The bill, which passed by a 68–30 vote, establishes a federal regulatory framework for stablecoins, including reserve requirements, issuer disclosures, and consumer protections. This legislation lays the groundwork for the US financial system to break free from the monopoly that banks have long had on money, creating room for innovation and competition in financial services.
Central to this transition is the adoption of stablecoins, cryptocurrencies designed to maintain a stable value by pegging them to a reserve asset. Stablecoins offer a stable medium of exchange and a store of value while enabling smoother digital transactions and wider blockchain adoption.
But why will Bitcoiners, who have long championed a decentralized, non-sovereign form of money, benefit from stablecoin legislation? After all, stablecoins are issued by private companies and are pegged to a government-issued fiat currency.
The rise of stablecoins does not diminish the value or importance of Bitcoin or other cryptocurrencies. In fact, the two complement each other.
Regulatory clarity in this space allows crypto entrepreneurs to price risk, threatens the monopoly banks have on money, and creates additional demand for dollars.
To many crypto entrepreneurs, any legislation is better than no legislation. The crypto world is currently suffering from a type of regulatory uncertainty paralysis. This was a central focus of May’s Bitcoin Conference, the world’s largest Bitcoin meeting, which featured speeches from JD Vance, Michael Saylor, and Donald Trump Jr. Many crypto leaders supported the passage of crypto regulations to set the groundwork for more formal rules of the road in their industry.
Codifying crypto regulations, to which the Senate’s GENIUS Act and House’s STABLE Act are central, allows entrepreneurs to confidently price risk in the crypto industry. The legislation can always be modified in the future, but having some clear regulatory structure encourages entrepreneurs to confidently make investments in this explosive industry.
As of now, banks effectively decide who gets access to capital and on what terms through their dominant control of checking accounts, savings accounts, and loans. The rise of stablecoins, however, offers a way out of this centralized system. Stablecoins enable individuals and businesses to bypass traditional banking by facilitating direct, peer-to-peer transactions on decentralized blockchain networks, eliminating banking intermediaries.
With their price stability pegged to an asset, global accessibility (anyone with an internet connection can access them), and integration with smart contracts on the blockchain, stablecoins provide a cost-effective and efficient alternative to traditional financial systems.
Adoption of stablecoins diminishes banks’ exclusive ability to control the money supply. As people and businesses use stablecoins, they are no longer contributing to the banks’ bottom line in the form of fees, loans, or deposits. Stablecoins can replace financial instruments like checking accounts, which is the most profitable part of a bank’s balance sheet. By creating a more efficient and transparent way to handle transactions, stablecoins lower the overall costs of financial services, threatening to upend the stranglehold banks have on money.
As more people adopt stablecoins globally, the demand for US dollars and treasuries will rise. The magnitude of this increase in demand is unknown; however, more demand, on net, lowers bond yields and makes it easier to add to the US debt. If Bitcoiners’ belief that the government has little self-control over fiscal policy holds true, they will benefit from the rise of stablecoins. The more demand there is for US dollars, the more the government will be encouraged to print and borrow to meet that demand. This could lead to inflationary pressures, which would, in turn, increase the value of cryptocurrencies, particularly Bitcoin, as a hedge against inflation.
The broad acceptance of stablecoins paves the way for more regulatory clarity within the broader crypto space. With clear rules for stablecoin issuance and use, businesses and consumers will have greater confidence in using stablecoins for everyday transactions. For Bitcoiners, regulatory clarity around stablecoin will help ensure that the entire crypto ecosystem has a fair shot at competing with traditional finance.
The future of crypto is evolving, and stablecoins are an important part of that evolution.