Nazia Saeed
- GENIUS Act separates interest-bearing stablecoins from payment-focused ones, aligning US regulations with global standards
- The act opens doors for new ‘killer apps’ and real-world stablecoin use cases, including payments and cross-border settlements
- Sygnum’s CIO predicts a shift to utility-focused stablecoins, as big players like PayPal and Mastercard lead the charge
The GENIUS Act, recently amended to separate interest-bearing stablecoins from those used for payments, is positioning the U.S. closer to a global consensus on stablecoin regulation, according to Fabian Dori, Chief Investment Officer at Sygnum. This shift is expected to drive the creation of “killer apps” that cater not only to current needs but also create entirely new demand, especially in the payments sector.
The GENIUS Act, which provides much-needed regulatory clarity, marks a pivotal moment for stablecoins. It lays the foundation for institutional players to build new products, fueling a growing demand for stablecoin infrastructure in payments. Giants such as Mastercard, PayPal, Amazon, and Walmart are already exploring the utility of stablecoins in payroll and cross-border settlements.
Shift from yield to utility in stablecoin market
With the restriction on interest-bearing stablecoins, the focus is shifting toward more utility-driven stablecoins. Dori noted that issuers will now prioritize features like real-time settlement, low transaction costs, and programmable capabilities that integrate smoothly into payment and trading systems.
The GENIUS Act encourages stablecoin issuers to focus on real-world use cases like cross-border efficiency. Jason Lau, Chief Innovation Officer at OKX, commented, “Utility beats yield now,” emphasizing that payment-focused stablecoins are better suited for driving real-world commerce adoption.
Regulatory clarity fueling payment and fintech growth
Aishwary Gupta, Global Head of Payment and Fintech at Polygon Labs, also highlighted that payment-focused stablecoin adoption was already gaining momentum before the GENIUS Act passed. He noted that Polygon saw a 67% rise in micropayment volume from February to June, reaching $110 million.
This shift is being driven by a growing demand for payment use cases, particularly in cross-border transfers and everyday commerce. Gupta added, “Regulatory compliance helps, but more important is how it meets real market demand.”
Retail adoption crucial to stablecoin success
Despite the industry shift, retail adoption remains key to the success of stablecoins. Dori emphasized that while fintechs may lead the charge, it’s consumer adoption that will ultimately determine how quickly stablecoin use cases evolve. Gupta also stressed that user-friendly platforms would be crucial for stablecoin integration in retail markets.
For instance, Polygon is working with a firm across Africa to facilitate cross-border B2B payments, with small payment volumes growing 190% from February to June.
The future of stablecoins in DeFi
DeFi protocols stand to benefit greatly from the clarity brought by the GENIUS Act, as stablecoins continue to anchor a significant portion of on-chain activity. Lau remarked, “The opportunity to offer compelling and unique use cases will capture stablecoin demand in the DeFi space,” indicating the growth and diversification of the market.
The GENIUS Act is a game-changer, marking the first federal framework for stablecoins and providing the regulatory certainty needed to propel the stablecoin market to the next level.
