The summer of stablecoins is in full swing, with Circle's stock rising over five times in just ten days!
Recently, the most watched stock in the US market is none other than the 'first stablecoin stock'. $Circle (CRCL.US)$ 。
The passing of the GENIUS Act by the US Senate has completely ignited market sentiment. It is important to note that this is a milestone victory for stablecoins and digital assets, marking the entry of the digital asset industry into a new era.
On June 18th, the 'first stablecoin stock' $Circle (CRCL.US)$ soared nearly 34%, with the stock price briefly exceeding 200 dollars, and has risen over five times in ten trading days. As of the time of publication, the company's after-hours trading has risen nearly 8%.
What is the Stablecoin Act? What is Trump's motive behind promoting this act?
According to Zheshang Research Reports, the GENIUS Act legislation includes four main points:
First, it provides a clear definition of stablecoins, specifying them as non-interest-bearing, non-securities settlement assets. The issuance of stablecoins must not offer interest or returns. The interest clause in GENIUS addresses the issue of interest margin ownership between non-interest bearing liabilities and interest-bearing assets for currency issuers. Similar to the interest generated by the dollar, which belongs to the Federal Reserve, the GENIUS Act explicitly states that the interest margin of stablecoins belongs to the issuing company. This setting prevents holders of stablecoins from obtaining 'excess returns' relative to the dollar, thus avoiding asymmetric competition with dollar bank deposits.
Secondly, a regulatory framework is clearly defined. The issuance of stablecoins can currently occur through federal and local 'dual-track licenses.' Explicit restrictions are placed on foreign entities issuing stablecoins, requiring them to 'comply with U.S. orders.'
Third, it strengthens reserve quality and auditing requirements to reduce financial risks. The GENIUS Act requires issuing institutions to support stablecoins with high-quality liquid assets (including Cash, short-term U.S. Treasury bills with maturities of less than 90 days, Federal Reserve repurchase agreements, FDIC-insured deposits, etc.).
Fourth, it enhances regulation. The act places stablecoin issuing institutions under the supervision of financial institutions, requiring them to strictly adhere to anti-money laundering (AML) regulations. Issuers are required to verify user identities and report suspicious transactions to relevant authorities.
Trump's promotion of the GENIUS Act has multiple objectives:
First, it helps with short-term debt financing, as the U.S. Treasury Department estimates that stablecoins could potentially generate about $880 billion in short-term debt demand by 2028. Currently, the issuance of short-term debt accounts for 84% of the total U.S. debt, and stablecoins are closely aligned with short-term debt issues.
Second, it is Bullish for the cryptocurrency funds that support Trump's election, as cryptocurrency funding is an important donor in Trump's 2024 campaign. For the first time in U.S. history, cryptocurrencies are key contributors to the presidential election in 2024.
Thirdly, this is bullish for the Trump family. The Trump family is actively involved in the Digital Currency market, including Trump Media establishing a $2.5 billion Bitcoin treasury, Eric Trump founding the Bitcoin mining company American Bitcoin, and the issuance of 'Trump Coin ($TRUMP)' and 'Melania Coin ($MELANIA)' by Trump and his wife.
Will stablecoins have their iPhone moment? Which companies are likely to benefit?
On June 17, the U.S. Senate passed the GENIUS Act, establishing regulatory rules for cryptocurrencies linked to the U.S. dollar. Currently, the bill has been submitted to the House of Representatives for review. President Trump stated that he hopes to sign the stablecoin legislation before Congress goes on recess in August.
In the current stablecoin market, USDT and USDC are the two main players.
According to a Research Report from GTJA Securities, as the GENIUS Act advances, USDC issuers $Circle (CRCL.US)$ are likely to become the biggest winners. This is due to their long-term proactive approach to regulation—continuously promoting asset audit transparency, cooperating with U.S. regulatory guidance and suggestions, and primarily holding reserves in cash and short-term U.S. Treasury bonds. After the bill passes, USDC, with its unique attributes of being 'registered in the U.S., having clear auditing, and being regulatory-friendly,' is expected to see an increase in its penetration rate within payment networks such as Visa, MasterCard, and PayPal.
However, USDT is facing challenges in survival mode. The issuer of USDT, Tether, is headquartered in the British Virgin Islands and has long relied on "offshore opacity" as its moat, with questions frequently raised about its asset reserve composition. With the implementation of the "GENIUS Act", the circulation of USDT in the U.S. will undoubtedly be significantly affected. Although Tether is not without options, these alternatives are not easy either:
Actively apply for a U.S. license according to regulatory requirements;
Abandon the U.S. market and shift to Asia, the Middle East, and other regions;
Establish cooperative mechanisms with compliant platforms to gain indirect access to the compliant network through "layered issuance" or "bridging" methods.
Overall, although USDT still has advantages due to its liquidity, network effects, and global adoption rate, the complexity of its compliance transformation and time costs provide a valuable window period for USDC. USDC is expected to leverage the favorable conditions created by the "GENIUS Act" to accelerate its penetration in global payment networks and institutional scenarios, potentially significantly increasing its market share.
Aside from Circle, which companies are worth paying attention to?
Circle's CEO Jeremy Allaire stated that crypto stablecoins have yet to reach their "iPhone moment" and that developers worldwide need to fully recognize the strength and opportunities of a "programmable digital dollar", similar to how they once realized the potential of programmable mobile devices in the past. But that moment is coming soon.
In the Hong Kong and U.S. stock markets, besides Circle, there are also other companies worth paying attention to including $Coinbase (COIN.US)$ 、 $Robinhood (HOOD.US)$ And Exchange.
Among them, Circle mainly collaborates with Coinbase, and both parties enjoy exclusive reserve income within their respective platforms, while the external reserve income is split 55-45. The profit distribution method of Circle and Coinbase is as follows:
USDC within the platform (100% of the reserve income within the respective platform belongs to them).
USDC on the Coinbase platform: Coinbase retains 100% of the reserve income, including Coinbase Exchange and Coinbase Prime custody service; it is expected to account for about 23% of the total USDC supply by Q1 2025 (rapid growth).
USDC on the Circle platform: Circle retains 100% of the reserve income, mainly referring to USDC held by Circle Mint; the proportion is relatively stable.
USDC off-platform (50/50 split)
USDC stored on third-party platforms is split 50/50, including DeFi protocols, other Exchanges, wallets, etc.; this segment is the fastest-growing source of USDC supply.
Stimulated by the surge in Circle, Coinbase also surged over 16% on Wednesday. Notably, the company recently launched stablecoin payment services, targeting the credit card giants; and has introduced USDC as collateral in the US Futures market.
In addition, some Cryptos in the US stock market are also expected to see an increase, including $Strategy (MSTR.US)$ 、 $MARA Holdings (MARA.US)$ 、 $Cantor Equity Partners Inc (CEP.US)$ etc.
In terms of Hong Kong stocks, such as $CHINA EB LTD (00165.HK)$、 $ZA ONLINE (06060.HK)$ 、 $LIANLIAN (02598.HK)$ 、 $STANCHART (02888.HK)$ 、 $JD-SW (09618.HK)$ 、 $OSL GROUP (00863.HK)$ 、 $LINKLOGIS-W (09959.HK)$ 、 $YEAHKA (09923.HK)$ Recently, driven by the significant rise of Circle combined with multiple factors such as the imminent implementation of the stablecoin legislation in Hong Kong, there has been a pleasing upward trend.
Meanwhile, $Visa (V.US)$ 、 $MasterCard (MA.US)$ 、 $PayPal (PYPL.US)$ Traditional payment companies are facing challenges. For traditional payment giants like Visa and MasterCard, their core competitive advantage lies in global clearing networks and transaction profit-sharing mechanisms. The rise of stablecoins, in essence, bypasses these centralized clearing networks, achieving a combination of payment and settlement.
According to The Wall Street Journal, American retail giants, including Walmart and Amazon, are actively exploring the issuance of their own stablecoins, bypassing the traditional credit card payment system.
Want to learn more market analysis?Futubull AI is now online!Providing precise answers, comprehensive insights, and grasping key opportunities!
Editor/Somer
