A recent report indicates that yield-bearing crypto assets are poised for significant growth, driven by the clarifying regulatory framework established by the passage of the U.S. Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act). The Act, signed into law in July 2025, represents the first comprehensive federal legislation on stablecoins, defining them as non-securities and imposing strict 1:1 reserve requirements (backed by cash or short-term U.S. Treasuries). This regulatory clarity is a major factor in enabling broader institutional adoption of digital assets.
Crucially, the GENIUS Act establishes a clear, regulated pathway for banks and non-bank entities to operate as permitted stablecoin issuers. While the Act prohibits stablecoin issuers from paying interest or yield directly on the stablecoin itself (to maintain its function as a stable medium of exchange rather than a security), it clarifies that the stablecoins can be used as collateral or currency for Decentralized Finance (DeFi) projects that are yield-bearing. This distinction creates a regulated and legally defined method for institutional players, who prioritize compliance, to monetize their stablecoin holdings through the broader DeFi ecosystem.Regulatory clarity has long been cited as the single most critical enabler for institutional involvement in crypto. By establishing oversight, reserve standards, and legal protections (including stablecoin holders’ priority in the event of issuer insolvency), the GENIUS Act significantly reduces risk and uncertainty for major financial institutions. This structural maturation is expected to catalyze broader stablecoin adoption, fueling growth in products built around them, such as tokenized real-world assets and regulated DeFi lending protocols.
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