The GENIUS Act, enacted in July 2025, is emerging as a potential game-changer for the U.S. financial system, one that could upend traditional banking models and accelerate the shift toward digital assets.
By driving demand for U.S. Treasuries, the Act aligns State and Federal stablecoin frameworks, which will play a crucial role in ensuring the continued global dominance of the U.S. dollar as the world’s reserve currency. Also, it is poised to play a key role in attracting more digital asset activity to the country by providing clear rules and promoting responsible innovation in the stablecoin market.
Designed to regulate stablecoin issuers, the legislation has inadvertently opened new competitive frontiers between banks, fintechs, and Big Tech giants. Co-founder and managing partner of Multicoin Capital Tushar Jain, noted that the recently enacted GENIUS Act, is expected to accelerate the migration of funds from traditional bank accounts into high-yield stablecoins.
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In a post on X, he wrote,
“The Genius Bill is the beginning of the end for banks’ ability to rip off their retail depositors with minimal interest. Post Genius Bill I expect the big tech giants with mega distribution (Meta, Google, Apple, etc) to start competing with banks for retail deposits. The tech giants will offer stablecoins with better yields and better UX (instant settlement, 24/7 payments, free transfers). These stablecoins will be embedded into the most widely distributed apps and operating systems in the world.
“Banks are going to have to pay more interest to depositors and their earnings will significantly suffer as a result. The banking lobby tried to protect their profits with the Genius Act’s prohibition on passing interest to stablecoin holders but that is easily circumvented as you can see by Coinbase’s yield sharing with customers.”
The U.S. Department of the Treasury estimated earlier this year that mass adoption of stablecoins could cause as much as $6.6 trillion to flow out of the banking system. While the GENIUS Act bans stablecoin issuers themselves from offering interest or yields to token holders, it does not explicitly extend the restriction to crypto exchanges or affiliated businesses, leaving room for potential workarounds.
The development has raised alarm within the banking sector, as U.S. banking associations warn that widespread adoption of yield-bearing stablecoins could destabilize the traditional financial system, which depends heavily on deposits to fund lending.
Industry leaders warn that the Act could spark a mass migration of deposits from low-interest bank accounts to high-yield stablecoins, threatening to erode bank profits and reshape how consumers store and grow their money.
While traditional savings accounts currently offer meager returns, averaging 0.40% in the U.S. and 0.25% in Europe, Stripe CEO Patrick Collison noted that stablecoins present a striking contrast. On lending platforms like Aave, Tether (USDT) and Circle’s USD Coin (USDC) offer yields of 4.02% and 3.69%, respectively, making them up to ten times more rewarding than conventional bank deposits.
This outlook aligns with reports from Fortune in June, which revealed that several major tech companies, including Visa, Apple, Stripe, Google, Airbnb, among others, were exploring the issuance of their own stablecoins to reduce transaction fees and streamline cross-border payments.
Last month, Global payments leader Visa unveiled a new pilot program to test stablecoins for cross-border transfers. This will give businesses a faster and more flexible way to move money internationally. The initiative will allow banks, remittance providers, and financial institutions to pre-fund Visa Direct with stablecoins instead of traditional fiat currencies.
By treating stablecoins as money in the bank or available balances for payouts, Visa aims to eliminate businesses needing to lock up large sums of cash days in advance.
Also, earlier this month, Stripe, a multinational financial services and software as a service company, rolled out Open Issuance, a new platform that enables businesses to create, launch, and manage their own stablecoins. The platform gives companies full control over their digital currency strategy removing reliance on third-party issuers, reducing fees, and unlocking new revenue opportunities through reserve rewards.
By connecting every issuer into a shared liquidity network, Open Issuance makes it faster and easier for businesses across industries to bring stablecoins to market and scale globally.
Outlook
As the stablecoin market currently boasts a $308.3 billion capitalization, led by USDT at $177 billionand USDC at $75.2 billion, the U.S. Treasury projects the market will expand by 566%, reaching $2 trillion by 2028.
This is an indication that the GENIUS Act may be just the catalyst needed to accelerate the shift from traditional banking to a stablecoin-driven financial future.