Circle (NASDAQ: CRCL) is so far the biggest beneficiary of the United States Senate passing landmark stablecoin legislation, but a host of non-crypto companies are eagerly lining up to dip their toes into the stablecoin pool.
One day after the Senate made history by passing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, shares of Circle, the issuer of the USDC stablecoin, closed Wednesday’s trading up more than one-third to $199.59. The shares rose another 6% in after-hours trading to nearly $212.
Circle’s status as the company most likely to benefit (at least, in the short term) from America officially endorsing stablecoins has led to a flurry of recent deals. These include the Shopify (NASDAQ: SHOP) e-commerce platform allowing its merchants to accept USDC payments from customers via Base, the Ethereum ‘layer 2’ network operated by the Coinbase (NASDAQ: COIN) digital asset exchange. (For what it’s worth, Shopify founder Tobias Lütke is a Coinbase director.)
Earlier this month, Sam Altman’s controversial eyeball-scanning World Chain (formerly Worldcoin) upgraded its USDC usage to native USDC, not the bridged version that previously transacted on the platform. Circle also signed a deal with Brazilian fintech Matera to integrate USDC on the latter’s Digital Twin real-time ledger.
On June 18, Coinbase Derivatives and clearing house Nodal Clear announced plans to utilize USDC as eligible collateral for futures transactions. Pending approval by the U.S. Commodity Futures Trading Commission (CFTC), the USDC-as-collateral scheme could commence next year.
Last weekend, Circle CEO Jeremy Allaire tweeted that stablecoins were the “highest utility form of money ever created.” Allaire suggested that stablecoins had yet to experience “the iPhone moment when developers everywhere realize the power and opportunity of programmable digital dollars on the internet.”
Curiously, while Circle’s stock price is soaring, USDC’s market cap is actually a couple billion dollars off its $62.4 billion peak in late-April. For the past month, it’s been bobbing up and down in a range between $60.5 billion and $61.5 billion, but so far, there’s no sign of a real breakout from that range.
Over that same period, the market cap of the leading stablecoin issuer Tether (USDT) has grown by over $4 billion to $155.6 billion, despite lingering doubt regarding the controversial company’s ability to comply with GENIUS’s transparency requirements.
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Trump wants big beautiful stablecoin bill on his desk… yesterday
There’s been talk that the House of Representatives, which has its own stablecoin legislation in the works, could complicate GENIUS’s chances of making it to President Trump’s desk for signing into law. The House’s preferred strategy is said to be coupling GENIUS with digital asset market structure legislation that’s been progressing in the House.
However, Trump put his thumb on the scale late on June 18, posting a no-nonsense message to his Truth Social account that bears quoting in full (and with the original capitalization):
The Senate just passed an incredible Bill that is going to make America the UNDISPUTED Leader in Digital Assets — Nobody will do it better, it is pure GENIUS! Digital Assets are the future, and our Nation is going to own it. We are talking about MASSIVE Investment, and Big Innovation. The House will hopefully move LIGHTNING FAST, and pass a “clean” GENIUS Act. Get it to my desk, ASAP — NO DELAYS, NO ADD ONS. This is American Brilliance at its best, and we are going to show the World how to WIN with Digital Assets like never before!
Stakeholders, including Circle’s Allaire, Coinbase chief legal officer Paul Grewal, Trump’s ‘AI & Crypto Czar’ David Sacks, and others, were quick to cheer on the president’s ‘suggestion’ to House leadership.
The response from House Republicans has been less enthusiastic, with Politico quoting a spokesperson for Rep. French Hill (R-AR) saying only that the House’s primary crypto sponsor was looking forward to “continued collaboration with our members and House leadership as we work toward a path forward.”
Trump’s impatience to sign stablecoin legislation into law could spark additional concerns regarding his intentions for the USD1 stablecoin, which emerged this spring via the family’s decentralized finance (DeFi) project World Liberty Financial (WLF).
In March, Trump issued an executive order stating that, as of September 30, the federal government would cease issuing paper checks for nearly all federal payments. In their place would come “modern, electronic funds transfer (EFT) methods,” including “digital wallets.”
It might seem beyond the pale to consider that Trump could announce USD1 as the digital asset that will be used for federal payments, with all the attendant benefits to USD1 that would involve. But Trump and his family members have so far shown little concern for public criticism of their crypto ventures, and Republicans in Congress have so far shown little sign that they intend to rein in these excesses.
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Tradfi Johnny-come-latelies
In the wake of GENIUS’s passage, Galaxy Digital boss Mike Novogratz told Bloomberg that bringing long-delayed regulations to the digital asset sector “will bring TradFi [traditional finance] into this technology.” Novogratz said he’d established Galaxy in 2017 “with the idea that institutions would finally come to the market and they’re here.”
Indeed. This week saw JPMorgan Chase (NASDAQ: JPM) announce plans for a permissioned ‘deposit token’ called JPMD on the Base network. While the company has been linked to stablecoin plans both on its own and (more recently) in collaboration with other major U.S. banking groups, the company said a ‘deposit token’ offered the same benefits of speed and ease of use while still retaining connections to mainstream banking.
Naveen Mallela, co-head of the company’s blockchain unit Kinexys, told CNBC that, for the moment, the stablecoin-like token will only be available for use by institutional clients seeking “more native on-chain cash solutions from pre-eminent and reputed financial institutions.” These institutions would likely use JPMD for “on-chain digital asset settlement solutions as well as for making cross-border business-to-business transactions.”
Banks’ interest in stablecoins isn’t limited to U.S. operators. Last week, Bloomberg reported that Deutsche Bank was considering whether to issue its own token or join an industry-wide effort. Spain’s Banco Santander is also mulling its stablecoin (both dollar- and euro-denominated) options, while the crypto subsidiary of France’s Société Générale announced plans for a dollar-denominated token on the Ethereum and Solana networks to accompany the euro-denominated stablecoin it launched two years ago.
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Corporate rush becomes a stampede
Things are equally frenetic on the corporate side, thanks to GENIUS permitting public companies to issue their own stables—provided they can clear a few performative hoops, like garnering the approval of a Stablecoin Certification Review Committee that may or not be swayed by how much money a company seeking a permit has donated to President Trump’s various causes.
But private companies, like Elon Musk’s X platform, don’t need the Committee’s approval. In late May, Musk tweeted confirmation of reports that X was beta-testing X Money, a payment/banking app that’s part of his overall plan to turn the platform into the ‘everything app.’ An @XMoney account describes itself as “for all your money moves, powered by X” and claims it will be “launching in 2025.”
While Musk’s statements to date haven’t referenced stablecoins as part of this plan, Fortune reported this month that X was having talks with payment processor Stripe regarding stablecoin payments. In February, Stripe completed its $1.1 billion acquisition of Bridge, a startup that enables businesses to accept stablecoin payments.
Mark Zuckerberg’s Meta (NASDAQ: META) recently signaled its interest in taking another crack at issuing its own currency (following the demise of its Libra/Diem token). That led some Democratic senators to send Zuckerberg a letter demanding to know his intentions, including whether he plans to help “threaten competition across the economy, erode financial privacy, and cede control of the U.S. money supply to monopolistic platforms that have a history of abusing their power.”
This month has seen reports by the Wall Street Journal (WSJ) and others regarding the growing number of corporate giants—including Airbnb (NASDAQ: ABNB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Walmart (NASDAQ: WMT), Expedia, Uber (NASDAQ: UBER) and more—exploring how best to incorporate stablecoins into their operations. Google Cloud (NASDAQ: GOOGL) has already begun accepting payments in PYUSD, the stablecoin issued by PayPal (NASDAQ: PYPL) in 2023.
The craze isn’t limited to Western firms. Bloomberg reported last week that Ant International, a Singapore-based offshoot of China’s Ant Group (parent company of the AliPay payment platform), plans to apply for a stablecoin issuer’s license in Hong Kong in August after the special administrative region’s new Stablecoins Ordinance takes effect.
Chinese e-commerce platform JD.com has also indicated its interest in a Hong Kong stablecoin license, and founder Liu Qiangdong said this week that his company plans to apply for similar permits “in all major sovereign currency countries in the world.” Liu cited stablecoins’ appeal in their ability to “reduce the global cross-border payment cost by 90%, and then improve the efficiency to within 10 seconds.” Liu expressed hope that one day, he’ll be able to use “JD’s local currency” for all payments he makes around the world.
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Dollar dominance vs. de-dollarization
Dollar-denominated stablecoins account for over 90% of the fiat-backed tokens currently in circulation. The sector’s massive growth projections are promoted as a way of preserving the status of the U.S. dollar as the world’s reserve currency, along with the exorbitant privilege this status provides. The theory is that, as stables proliferate and grow, the companies behind them will need to buy additional billions—and possibly trillions—of U.S. Treasury bills as reserve assets.
That would be very good news indeed, as both T-bills and the dollar have been showing signs of serious weakness, the likes of which America has not previously experienced. This week, Bloomberg quoted US Bancorp’s head of currency sales Paula Comings saying many exporters of products to the U.S. are now asking their U.S. customers for payment in their local currency, not the dollar.
Also this week, Home Depot co-founder Ken Langone told Fox Business that “four weeks ago, [America] couldn’t float a 20-year bond. There weren’t buyers. That’s a danger signal … when the integrity of our debt is subject to question, the next thing is your currency. And the thing we want to make sure we do is preserve [the dollar’s] reserve currency status.”
In the wake of President Trump imposing tariffs on the world, foreign entities appear to have reduced their exposure to T-bills and the dollar by $63 billion in just the past two months. That’s a small chunk of the recent all-time high of $9 trillion in foreign ownership of T-bills, but this financial snowball could turn into an avalanche if confidence in the U.S. government’s fiscal propriety continues to erode.
U.S. Treasury Secretary Scott Bessent has repeatedly claimed that stablecoin issuers are riding to the rescue. The day after GENIUS’s passage, Bessent tweeted an interview clip in which he claimed “stablecoins could reinforce dollar supremacy” by becoming “one of the largest buyers” of T-bills. Bessent has offered a variety of projections in terms of quantifying this impact, suggesting one day that issuers could buy $2 trillion worth of T-bills by 2028, later upping that to $3.7 billion by 2030.
Others offer more modest forecasts, with Citigroup (NASDAQ: C) analysts putting total T-bill purchases by stablecoin issuers closer to $1 billion by 2030, while JPMorgan wouldn’t go higher than $525 billion.
And there are also risks involved. A recent study suggested the “growing interdependence” of stablecoins and the U.S. Treasury could cause problems down the road. For instance, “mass redemptions might strain available liquidity (and the reputation) of a market supposed to function as global safe haven … If an issuer is unable to liquidate Treasuries in a crisis, faith in the payment system will likely fall, diminishing a token’s moneyness as well as the appetite of merchants and others to accept the stablecoins as a credible form of payment.”
Fears of ‘contagion’ from the financial failure of a stablecoin issuer or a financial institution holding custody of stablecoin reserves will only grow as the sector makes further inroads into the traditional banking system.
The March 2023 failure of Silicon Valley Bank—at which Circle kept over $3.3 billion of its cash reserves—was the closest the stablecoin sector came to a mass casualty event. In the end, the Federal Deposit Insurance Corporation (FDIC) rode to the rescue, checkbook in hand.
It remains to be seen if the federal government would offer a similar bailout in the case of a much larger failure—indeed, it’s unclear whether the government could do so, depending on the size of the issuer/institution and the government’s own shaky finances. We’re officially entering uncharted waters, so check below your seat to make sure your life preserver’s still there.
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