"The Genius Act" ignites a wave of stablecoin issuance, but expansion of actual use cases faces many challenges.

Given a new US law has established the first regulatory rule in history for stablecoins, financial companies like Wall Street giant Bank of America Corp (BAC.US) and US small to medium-sized business bank Fiserv (FI.US) are preparing to launch their own respective dollar-backed "on-chain finance" systems. However, digital asset experts warn that the future of stablecoins and "on-chain finance" may not be straightforward. The GENIUS Act sets federal rules for stablecoins, and US President Donald Trump signed the GENIUS Act into law on July 18, officially establishing federal rules and official guidelines for cryptocurrency tokens tied to the US dollar, known as "stablecoins". This first US law aimed at promoting the use of cryptocurrencies and other digital assets on a large scale may pave the way for digital assets to become a daily means of payment and cross-border fund transfers. Stablecoins are designed to maintain a constant monetary value, usually pegged 1:1 to the US dollar. The use of stablecoins has surged in recent years, especially in fund transfers between cryptocurrencies like Bitcoin and Ethereum, as well as in the accelerated penetration of cross-border financial services. Stablecoins are a special type of cryptocurrency that maintains a stable value ratio by anchoring core reserve assets such as the US dollar, Euro, or gold. With key legislation on stablecoin regulation accelerating through the US Congress, these price-stable cryptocurrencies are moving into the mainstream asset field of the global financial market. Stablecoins essentially represent the "on-chain dollar", with high liquidity assets tied 1:1 to the US dollar (cash, short-term US Treasury bonds) serving as underlying collateral. Stablecoins combine the "dollar" with "blockchain", providing a new type of payment vehicle that is both stable and efficient, enabling the capital market to see the commercial potential of "digital dollarization". Undoubtedly, high interest rates and rate hike cycles allow these reserves to earn substantial interest, bringing near-banking level profits to stablecoin issuers (such as Circle and Tether), while also providing yield similar to a "quasi-money market fund". Today, a series of financial and retail companies are brewing their own stablecoin strategies to take advantage of the significant opportunities provided by stablecoins for instant payments and rapid cross-border settlements. Traditional banks may take days to process payments on the payment track and even longer for cross-border transactions. According to The Wall Street Journal, companies considering issuing stablecoins also include Walmart Inc. and Amazon.com, Inc. Walmart Inc. and Amazon.com, Inc. did not immediately respond to requests for comments. The so-called "tokenization" discussed by cryptocurrency enthusiasts this year focuses on Real-World Assets (RWAs) - traditional financial/physical assets such as government bonds, loans, fund shares, real estate, accounts receivable, carbon credits, etc., measurable assets with value that originally exist in the traditional financial system or the real economy, mapped into programmable and transferable digital asset tokens on the blockchain. Since the beginning of this year, stablecoins have successfully verified on-chain payment paths and the core logic of "on-chain finance". A report by Citigroup shows that monthly stablecoin settlement volumes have reached $6,500$7,000 billion, and even traditional banking giants are planning to issue their stablecoins. Most studies describe the concept of RWAs as "the ownership of tangible or off-chain assets, represented on the blockchain by tokens issued through smart contracts". The World Economic Forum points out that tokenization allows these assets to have a unified shared ledger, real-time settlement, and programmable properties, thereby reducing delivery risks and increasing efficiency. For traditional banking giants, after stablecoins, the wave of generalized RWA tokenization could significantly broaden revenue sources and further explore blockchain efficiency dividends within a compliance framework. According to Ripple and the Boston Consulting Group's forecast data, the scale of tokenized real-world assets (centered on RWAs) is expected to exceed $18 trillion by 2033, with a Compound Annual Growth Rate (CAGR) since 2025 expected to reach 53%. Experts warn that there are still significant obstacles However, some experts say that this new law will not immediately "open the floodgates". The "new opportunities" for stablecoins that companies are facing will inevitably bring many complex considerations, involving not only regulatory and monetary strategic aspects but also underlying technological and infrastructure aspects. Typically, a company must go through a long process to deploy its own stablecoin, or decide whether it is more cost-effective to integrate existing stablecoins (such as the stablecoin USDC issued by Circle) into its business. First, companies need to determine the specific use of their stablecoin. For example, a retail platform can provide stablecoins to customers for shopping, which may attract users more familiar with cryptocurrency trading. Some companies may use stablecoins for internal cross-border payments, as stablecoins can achieve nearly instantaneous and much cheaper cross-border payments, but this also brings related issues regarding the security of cryptocurrency assets and the increased likelihood of facing threats from hackers. Creating your own stablecoin or adopting an existing stablecoin? How a company plans to use stablecoins in the future may affect whether it opts to create its own stablecoin or cooperate with existing stablecoin issuing partners. "The expected use case will be very important," said Stephen Aschettino, a partner at Steptoe law firm. "Is this to truly drive interaction between customers and issuers, or is the main motivation of the issuer to have a more universal and immediate effect for stablecoin payments?" For non-bank Financial Institutions, stablecoins will bring new compliance costs and regulatory requirements, as the GENIUS Act requires issuers to follow core regulatory requirements such as anti-money laundering and Know Your Customer (KYC) regulations. Jill DeWitt, Senior Director of Compliance and Third-Party Risk Management Solutions at Moody's Corporation, stated: "Institutions that already have robust KYC risk management and regulatory change management programs, or are working to implement these program elements, may have a competitive advantage." One class of institutions likely to have this advantage is banking institutions, which are not unfamiliar with the specific avenues for screening sanctions-related risks and verifying customer identities. Wall Street focuses on proprietary stablecoins Financial giants Bank of America Corp and Citigroup are actively considering issuing their own stablecoins rather than adopting existing stablecoins like Tether. The CEOs of these two Wall Street banks stated this in their earnings calls last month. Others, such as Morgan Stanley, are closely monitoring developments in the stablecoin sector. JPMorgan Chase CEO Jamie Dimon said the bank will actively participate in the stablecoin business, but did not provide specific details. Before stablecoins officially launch, traditional Wall Street banks often need to weigh multiple factors, including how holding tokens may impact liquidity regulatory requirements, as noted by Julia Demidova, product manager for digital currency products and strategic business at FIS. According to existing Bank of America Corp regulations, banks that include assets like stablecoins on their balance sheets may be required to hold more capital. "The GENIUS Act is great, but if a bank includes stablecoins on its balance sheet under prudent banking regulatory guidelines, you still need to pay attention to the asset's risk weight," Demidova said. Choosing "permissionless" or private blockchain? Another key issue is how to issue stablecoins. Like other cryptocurrencies, stablecoins are created on the blockchain - a digital ledger that records transactions. There are currently hundreds of existing blockchain networks, with Ethereum and Solana being two of the most popular foundational blockchain networks. Both are considered public or "permissionless" blockchains, as anyone can view all transactions on these blockchain networks. However, it is important to note that what is usually made public are address, amount, time, contract calls, and other on-chain data; what is typically not public is the true identity of coin holders and their KYC information, which are usually held by issuers, exchanges, or digital asset custodians. However, it is not yet clear which attributes of issuing stablecoins companies will prioritize. According to Demidova, particularly banks may choose to build their own private or "permissioned" blockchain. She stated: "Banks would expect and require very clear governance and architecture. In a permissionless environment, there are no corresponding governance and control mechanisms in place." Therefore, if a company has higher privacy/governance requirements for transaction visibility, they may consider a permissioned chain/private chain, enterprise L2, or compliant restricted token architecture, but this entails sacrificing the open composability of public chains and requires a balance between transparency, compliance, cost, and ecosystem interoperability. Other institutions - such as infrastructure providers like Bastion who issue their own stablecoins for enterprises - CEO Nassim Eddequiouaq believe that permissionless blockchains also have their advantages. He said: "We see a great deal of interest from those who already have users, have been tested on a large scale (including during periods of increased trading activity) on existing blockchain networks." While the GENIUS Act has been signed into law, the effective dates of some specific details may be years away; meanwhile, federal banking regulators are expected to issue rules to fill certain regulatory gaps. For example, the Office of the Comptroller of the Currency is expected to issue rules defining various risk management and compliance requirements. Under the new US framework, the US Treasury Department will have to publish rules on foreign stablecoin regulatory systems and their compatibility with the new US framework. Aschettino stated: "These complicated matters will have to be phased in."