{"id":7304,"date":"2025-08-09T09:43:00","date_gmt":"2025-08-09T09:43:00","guid":{"rendered":"https:\/\/bitunikey.com\/news\/defi-lending-starts-with-stablecoins-and-the-genius-act-makes-them-stronger-opinion\/"},"modified":"2025-08-09T09:43:12","modified_gmt":"2025-08-09T09:43:12","slug":"defi-lending-starts-with-stablecoins-and-the-genius-act-makes-them-stronger-opinion","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/defi-lending-starts-with-stablecoins-and-the-genius-act-makes-them-stronger-opinion\/","title":{"rendered":"DeFi lending starts with stablecoins, and the GENIUS Act makes them stronger | Opinion"},"content":{"rendered":"<div class=\"post-detail__content blocks\">\n<div class=\"cn-block-disclaimer\">\n<div class=\"cn-block-disclaimer__icon\">\n            <svg class=\"icon icon-info\" aria-hidden=\"true\"><use xlink:href=\"#icon-info\"><\/use> <\/svg>        <\/div>\n<p class=\"cn-block-disclaimer__content\">\n            Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news\u2019 editorial.        <\/p>\n<\/p><\/div>\n<p><!-- .cn-block-disclaimer --><\/p>\n<p>If you\u2019ve been worried about what the GENIUS Act can inadvertently do to DeFi lending, don\u2019t. Stablecoins are the quiet workhorses of crypto. They\u2019re not flashy, they don\u2019t swing 30% in a day, and they rarely make headlines \u2014 unless something goes wrong. But behind the scenes, they power nearly every major function in decentralized finance.<\/p>\n<div id=\"cn-block-summary-block_47b8cd8c33ed5812b09f86a7a93c39cb\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>Stablecoins are the backbone of crypto, whether borrowing, trading, or providing liquidity, stablecoins enable nearly every major use case, quietly powering the ecosystem.<\/li>\n<li>The GENIUS Act is a breakthrough: passed in July 2025, it creates the first U.S. federal framework for fiat-backed stablecoins, establishing licensing, reserve, AML\/KYC, and audit requirements.<\/li>\n<li>This benefits DeFi more than it hurts it, by making stablecoins more transparent and credible, the law strengthens DeFi lending infrastructure and boosts institutional confidence, without directly regulating protocols.<\/li>\n<li>Regulation isn\u2019t the end of crypto freedom; it\u2019s the foundation for growth. The GENIUS Act helps DeFi scale sustainably, with resilient, compliant rails that can support real-world adoption and volume.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>Need to borrow against your crypto holdings? You\u2019re likely getting a loan in a stablecoin. Providing liquidity? You\u2019re pairing with a stablecoin. Swapping tokens? You\u2019re probably routing through a stablecoin pool.<\/p>\n<p>Stablecoins were never particularly \u201chot\u201d or \u201ctrendy,\u201d with the market paying more attention to other verticals that promised to provide endless returns or build generational wealth overnight. But the truth of the matter is that they are probably the \u201chottest\u201d thing on the market right now. Let me show you why.<\/p>\n<p>Currently, the stablecoin market cap <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/view\/stablecoin\/\" target=\"_blank\" rel=\"nofollow\">stands<\/a> at over $273 billion. The world\u2019s major companies, like <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2025\/04\/23\/paypal-introduces-3point7percent-yield-on-stablecoin-balances-to-boost-payments-activity.html\" target=\"_blank\" rel=\"nofollow\">PayPal<\/a>, <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.wsj.com\/finance\/banking\/walmart-amazon-stablecoin-07de2fdd?gaa_at=eafs&amp;gaa_n=ASWzDAiG_KVtkfDmEGMhfIFTBXme8icjJGUj82YHXZxmTCOzYKlUCelCzH9gJF8jfYo%3D&amp;gaa_ts=68787d4f&amp;gaa_sig=h4cG24RCs9oiefvoEJRmLW5BXrxAg2bHUTQaeQnedBwnBIHlaPS2L256ayi2GKblmKlE6fIx8UPJYV_8iY6BOw%3D%3D\" target=\"_blank\" rel=\"nofollow\">Walmart, and Amazon<\/a>, are engaging with stablecoins, with some of them thinking about issuing their own. The USD Coin (USDC) issuer Circle\u2019s IPO that went live in June was so successful that it prompted other crypto companies to consider going <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2025\/07\/18\/peter-thiel-backed-cryptocurrency-exchange-bullish-files-for-nyse-ipo.html\" target=\"_blank\" rel=\"nofollow\">public<\/a>. Even the U.S. president\u2019s DeFi company, World Liberty Financial, has its own stablecoin called USD1.\u00a0<\/p>\n<p>For years, stablecoins have fueled crypto activity, but they\u2019ve existed in a legally gray area. Until now.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h2 class=\"wp-block-heading\">Enter the GENIUS Act<\/h2>\n<p>Passed by Congress and signed by President Trump on July 17, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act is the first federal legislation in the U.S. to create a formal regulatory framework for stablecoins.\u00a0<\/p>\n<p>At its core, the <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.congress.gov\/bill\/119th-congress\/senate-bill\/1582\/text?q=%7B%22search%22%3A%22genius+act%22%7D\" target=\"_blank\" rel=\"nofollow\">GENIUS Act<\/a> introduces a legal basis for stablecoins that are fully collateralized 1:1 with fiat (typically U.S. dollars or other highly liquid assets), issued by non-bank entities legally operating in the United States, and licensed under a new federal \u201cGENIUS license\u201d or equivalent state frameworks.<\/p>\n<p>It also sets clear, enforceable rules for reserve requirements, anti-money laundering procedures, and KYC compliance, as well as public disclosures and regular audits of reserves. Trump <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.cbsnews.com\/news\/trump-signs-genius-act-crypto-bill\/\" target=\"_blank\" rel=\"nofollow\">called<\/a> this legislation a \u201cnew, exciting frontier\u201d for crypto. Crypto builders agree, but not in the way one might think.\u00a0<\/p>\n<h2 class=\"wp-block-heading\">Not so grim for the DeFi lending land<\/h2>\n<p>I\u2019ve seen comments and opinions that are not very excited about this legal development. And I understand why: Regulation doesn\u2019t sound very \u2018crypto land-y.\u2019 And there\u2019s especially a lot of frustration around what this could mean for DeFi lending, once one of the most popular areas of crypto.<\/p>\n<p>Here\u2019s the thing: the GENIUS Act doesn\u2019t regulate DeFi, at least directly, that is. But it does handle the questions around the quiet infrastructure behind nearly every major DeFi lending protocol.<\/p>\n<p>DeFi lending protocols depend on stablecoins for collateral, liquidity, and settlement. If those stablecoins aren\u2019t credible, the whole system gets shaky. By setting strict requirements for reserves, audits, and compliance, the GENIUS Act gives DeFi access to a more secure and transparent type of stablecoin.<\/p>\n<p>In practice, this could mean stronger collateral quality across lending markets, better protection for users in case an issuer fails, and clearer legal standing, making DeFi more attractive to institutions and serious builders. This doesn\u2019t just reduce systemic risk \u2014 it helps DeFi mature into a more trustworthy and scalable alternative to traditional finance.<\/p>\n<p>Sure, this law doesn\u2019t solve everything. It doesn\u2019t address algorithmic or crypto-backed stablecoins. It leaves wiggle room around terms like \u201ctimely redemption.\u201d And it doesn\u2019t directly govern how DeFi protocols use these assets. But it\u2019s a big step in the right direction. And it\u2019s much more than the industry had till July 17.<\/p>\n<h2 class=\"wp-block-heading\">The bottom line<\/h2>\n<p>The GENIUS Act is about more than regulating stablecoins; it also lays the groundwork for a more stable, credible, and scalable DeFi ecosystem. By giving legal clarity and enforceable standards to fiat-backed stablecoins, it supports innovation without smothering it. Users get safer, more reliable tools. And the infrastructure that powers open finance gets a much-needed upgrade.<\/p>\n<p>DeFi remains DeFi, but now with a more resilient, more compliant infrastructure underneath it. That makes the entire space more robust, not just for early adopters and builders, but for the next wave of users entering web3.<\/p>\n<p>Because here\u2019s the truth: freedom in finance only matters if it\u2019s built on something stable. The GENIUS Act doesn\u2019t restrict decentralization \u2014 it helps ensure it doesn\u2019t collapse under its own weight. It\u2019s not about limiting innovation. It\u2019s about making sure the foundation doesn\u2019t crack the moment real volume, real users, or real pressure shows up.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<div class=\"cn-block-author author-card\">\n<div class=\"author-card__photo\"><\/div>\n<p><!-- .author-card__photo --><\/p>\n<div class=\"author-card__content\">\n<div class=\"author-card__name\">\n                Vlad Kamyshov            <\/div>\n<p><!-- .author-card__name --><\/p>\n<div class=\"author-card__bio\">\n<p><b>Vlad Kamyshov<\/b><span style=\"font-weight: 400;\"> is the CEO of EVAA Protocol, a leading player in the TON ecosystem. With a deep understanding of the DeFi market, Vlad is committed to bringing value to the web3 audience. Under his leadership, the project raised a pre-seed round in the summer of 2023 and secured $2.5 million in 2025, fueling EVAA\u2019s rapid growth. He also forged strategic partnerships with key players in the TON ecosystem \u2014 including the TON Foundation, Notcoin, Storm Trade, Pyth, Telegram Wallet \u2014 and integrated EVAA into major platforms like Tonkeeper, Tonstakers, Bemo, TON Space as well as prominent CEXs such as OKX, Bitget, and Gate.io.<\/span><\/p>\n<\/p><\/div>\n<p><!-- .author-card__bio --><\/p>\n<div class=\"author-card__social\">\n<p><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/in\/vlad-kamyshov-194a1b220\/\" class=\"community-link\" target=\"_blank\" rel=\"nofollow\" aria-label=\"LinkedIn\"><\/p>\n<p>    <svg class=\"community-link__icon\" aria-hidden=\"true\">\n        <use xlink:href=\"#icon-social-linkedin\"><\/use>\n    <\/svg><\/p>\n<p><\/a><\/p><\/div>\n<p><!-- .author-card__social --><\/p><\/div>\n<p><!-- .author-card__content --><\/p><\/div>\n<p><!-- author-card --><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news\u2019 editorial. If you\u2019ve been worried about what the&hellip;<\/p>\n","protected":false},"author":1,"featured_media":7305,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7304","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=7304"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7304\/revisions"}],"predecessor-version":[{"id":7306,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7304\/revisions\/7306"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/7305"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=7304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=7304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=7304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}