GENIUS Act Stops Tech Giants From Taking Over Crypto

The law includes strict provisions like antitrust reviews, a ban on interest-bearing stablecoins, and requirements for issuers to operate as standalone entities. Circle’s Dante Disparte sees this as consumer-friendly and supportive of dollar strength. Analysts also suggest the Act could redirect yield-seeking capital toward Ethereum-based DeFi, which could fuel a new wave of decentralized finance activity. Circle Applauds GENIUS Act The recently passed GENIUS Act is being hailed by Circle’s Chief Strategy Officer, Dante Disparte, as a milestone in US stablecoin regulation, particularly for its guardrails that prevent tech giants and financial institutions from monopolizing the market. On the Unchained podcast , Disparte mentioned what he termed a “Libra clause” in the bill. This is a provision requiring any non-bank entity wishing to issue a dollar-backed stablecoin to form a standalone company that resembles Circle rather than a traditional bank. These issuers would also need to pass antitrust evaluations and gain approval from a Treasury Department-led committee with veto power. Traditional banks are not exempt from restrictions. Under the new framework, any lender that wanted to issue stablecoins must do so through a legally distinct subsidiary, with stringent prohibitions against leveraging those coins for lending or risk-taking. According to Disparte, this setup is even stricter than the deposit-token models that were proposed by firms like JPMorgan, and he believes it ultimately benefits consumers, market participants, and the US dollar. The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act passed with bipartisan support after securing over 300 votes in the House, including 102 from Democrats. The legislation introduces a comprehensive legal structure for stablecoin issuance in the US. Smaller issuers under the $10 billion asset threshold can still operate under state-level money-transmitter laws, but once that cap is exceeded, a national trust-bank charter becomes mandatory. Among the act’s most controversial elements is the outright ban on interest-bearing stablecoins and the imposition of criminal penalties for issuing unbacked tokens. This is a direct response to the collapse of experimental models like Terra. While some critics warn that banning yield could slow consumer adoption and shift innovation overseas, Disparte dismissed those concerns. He believes that yield should be a function of decentralized finance protocols, not the base-layer stablecoins themselves. GENIUS Act to Fuel DeFi Surge? The passage of the GENIUS Act is also expected to influence the future of decentralized finance and Ethereum, according to several crypto analysts. The legislation includes a ban on yield-bearing stablecoins, which previously allowed holders to earn interest through mechanisms like staking and lending. This move could shift demand toward Ethereum-based DeFi applications, which is one of the few remaining avenues for generating on-chain yield. Crypto analyst Nic Puckrin believes that the removal of yield opportunities from stablecoins is a positive development for DeFi, as it could position Ethereum as a core alternative for passive income generation. CoinFund President Christopher Perkins pointed out that without yield, the dollar becomes a depreciating asset. He argued that decentralized finance offers a crucial platform to generate yield and preserve value. He even predicted that what was once a “stablecoin summer” could now evolve into a “DeFi summer.” GENIUS Act (Source: US Senate ) The appeal of yield-bearing instruments extends beyond retail users and into the institutional realm as well. Financial institutions, which are under pressure to generate returns for their shareholders, may increasingly turn to DeFi as a source of yield now that regulated stablecoins are stripped of this capability. This shift could accelerate the flow of institutional capital into on-chain finance, and intensify competition with traditional banking models. The ban on interest-bearing stablecoins also stirred political and economic debate. At the DC Blockchain Summit in March, Senator Kirsten Gillibrand warned that these products posed a threat to the traditional banking sector. She argued that if customers could earn meaningful yield from stablecoins, the foundational demand for banks would collapse. New York University professor Austin Campbell pushed back by accusing lawmakers of protecting the banking industry under the guise of consumer protection. He referred to opposition against interest-bearing tokens as “cartel protection.” Adding to the critique, Tether co-founder Reeve Collins suggested that yield-bearing fiat-backed tokens are more attractive by design and could eventually replace traditional stablecoins. He explained that, assuming equal trust in stability, investors will naturally gravitate toward the option that provides yield. With yield now pushed out of the base stablecoin layer by US legislation, DeFi protocols on Ethereum may be perfectly positioned to fill that vacuum and attract a new wave of users and capital. Crypto Week Ends With Clarity Overall, Crypto Week concluded with major regulatory developments. However, some experts believe that the new clarity is only the beginning of a much bigger journey toward full-scale adoption and integration. Leo Fan , co-founder of Cysic, said that while the GENIUS Act offers much-needed legal guidance, it merely sets the stage for the next phase of growth. Fan described this shift as foundational, as it offers developers, investors, and institutions the green light to build and innovate in a more clearly defined regulatory framework. He stressed that legal clarity is just one part of a much larger equation. For crypto to reach its full potential, scalable blockchain infrastructure, real-time verification mechanisms, and reliable custody solutions are essential. According to Fan, the GENIUS Act lays the groundwork for these advances and begins to frame crypto as foundational infrastructure that can be integrated into key sectors like finance, identity, and privacy systems. With the regulatory path becoming more defined, Fan believes the industry is now better positioned to move toward real-world adoption.

Source: Coinpaper