Stablecoin: The Most Bullish Crypto Narrative of This Cycle?

Stablecoins are becoming increasingly popular and are considered the easiest gateway to introduce the public to the world of crypto and blockchain. Their stable value, which is based on fiat currency, makes them more acceptable to the general public, and even governments such as the United States are beginning to support their development through regulations that are currently being drafted. If the United States is serious about this, crypto adoption could spread faster than expected.

Stablecoin Regulations in the United States: Genius Act vs. Stable X

Currently, two major bills are being discussed in the United States to regulate stablecoins, namely the Genius Act and Stable X. Although they have many similarities, there are important differences that could have a significant impact on the crypto industry in the future.

Genius Act: Support for Innovation

The Genius Act (Guiding and Establishing National Innovation for U.S. Stablecoin) was drafted by the U.S. Senate with the aim of providing legal certainty for stable coins to develop with clear regulatory support, without hindering growing innovation.

Stable X: Focus on Accountability and Strict Oversight

Meanwhile, Stable X (Stablecoin Transparency and Accountability for a Better Economy) is a proposal from the U.S. House of Representatives that is more stringent. Its primary focus is on accountability and stronger oversight by federal regulators over stablecoin issuers.

Key Differences Between the Genius Act and Stable X

1. Stablecoin Issuer Authority

• • Genius Act allows states to continue regulating stablecoins with a market capitalization below $10 billion.
  • Stable X removes this cap and grants greater authority to federal regulators, promoting broader centralization of oversight.

2. Algorithmic Stablecoins

• • Genius Act only requires a review by the Department of the Treasury regarding algorithmic stablecoins.
  • Stable X imposes a two-year moratorium on issuers of algorithmic stablecoins, indicating a more cautious approach, possibly due to the trauma of events such as the collapse of Terra Luna and the UST stablecoin.

3. Asset Reserves

• • Both agree that stablecoins must be fully backed by real assets.
  • Stable X is more specific, allowing only assets such as Treasury Bills and other government instruments.
  • The Genius Act provides some leeway on the form of reserves used.

4. Issuer Requirements

Both drafts state that only banks, credit unions, or non-bank institutions that have obtained approval may issue stablecoins.

Stable X adds a prohibition on individuals who have been convicted of a felony from serving as officers in an issuing company.

5. Transition Period

The Genius Act gives issuers two years to comply. Stable X does not specify a clear deadline but is more open to international collaboration with countries that have similar regulatory regimes.

• • Genius Act gives issuers two years to comply.
  • Stable X does not specify a clear deadline but opens up opportunities for international collaboration with countries that have similar regulatory regimes.

6. Classification of Stable Coins

Both drafts emphasize that stablecoins are not classified as securities. The Genius Act even states that stablecoins are not commodities, thereby removing the possibility of oversight by the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission).

Establishing these regulations is good news for the crypto industry, which has been stuck in legal uncertainty. With bipartisan support in Congress and direct pressure from President Joe Biden to pass the bill before the recess, stablecoin regulations in the United States are just waiting to be finalized.

Adoption of Stablecoins by Large Companies

Beyond the regulatory realm, major companies are beginning to seriously adopt stablecoins in their operations.

New York Stock Exchange (NYSE) and Circle

NYSE, through its parent company Intercontinental Exchange (ICE), has partnered with Circle to integrate the stable coin USDC into the global financial system. This step is highly significant as NYSE is a symbol of the traditional financial system. Their involvement signifies institutional acceptance of stable coins.

BlackRock and BUIDL

BlackRock, one of the world’s largest asset management companies, has launched the stablecoin BUIDL through a partnership with Securitize. Interestingly, this stablecoin is backed by BlackRock’s own tokenization fund, the BUIDL Fund, which contains traditional assets such as Treasury Bills and cash equivalents.

PayPal and PYUSD

PayPal is also getting in on the action. They are expanding the use of the stablecoin PYUSD for global transactions through their acquired platform HyperWallet. The goal is to accelerate and simplify cross-border payments for both individual users and merchants. With its global user base and robust infrastructure, PayPal has the potential to bring stablecoins to hundreds of millions of people in a short time.

The adoption of stablecoins by these large companies is not only about efficiency, but also about increasing public trust in blockchain technology, as it is being used by names that have long been trusted by the public.

Types of Stablecoin Business Models

Stablecoin business models vary depending on how their reserves are structured. There are three main types:

1. Full Reserve

Example: USDC

• Backed 100% by liquid assets such as cash or short-term bonds.
• Very secure and suitable for transactions, but profitability is low because returns from reserve assets are minimal.

2. Fractional Reserve (Partial Reserve)

Example: USDT (Tether) and USDS

• A portion of the reserves is held in high-yield assets such as corporate bonds or precious metals.
• Higher potential returns, but also higher risks, especially during market volatility.

3. No Reserve (Algorithmic)

Example: LUSD

• There are no physical assets backing its value; instead, it relies on an internal economic mechanism.
• High risk and vulnerable to failure if market demand drops sharply.

Currently, the market tends to prefer the full reserve model as it is considered more stable and transparent. However, in the future, a hybrid model combining security and profitability may emerge.

Stablecoins as a Bridge for Crypto Adoption

One of the main reasons stablecoins are important is their ability to bridge traditional finance and the crypto world. Because their value is stable and fiat-backed, stablecoins are easier for new users to understand compared to Bitcoin or Ethereum, which are more volatile.

With stablecoins, people can conduct on-chain transactions without having to learn the technical details of blockchain. They simply send, receive, or store them like regular digital money. This opens the door for millions of people to try blockchain technology with minimal risk.

Additionally, stable coins enable fast and inexpensive cross-border transactions. No need for international bank accounts or days-long clearing processes—just a digital wallet and an internet connection. This is why stable coins are often referred to as the stepping stone toward broader crypto adoption.

Once users feel comfortable with stablecoins, they can gradually explore other cryptocurrencies or begin to understand concepts like DeFi (Decentralized Finance) and Web3.

Conclusion

Stablecoins are no longer a small experiment in the crypto world. With clear regulatory support, adoption by major institutions, and evolving business models, stablecoins have become a key pillar in the digital financial system.

However, it is important to understand the risks associated with each stablecoin—check who the issuer is, how the reserves are backed, and what regulations govern it. Don’t just hold without doing your research.

With the ongoing developments, stablecoins have the potential to accelerate global cryptocurrency adoption, bringing more people into the blockchain ecosystem in a safer and more accessible way.