Will the GENIUS Act Usher a Stablecoin Startup Funding Boom?

The “Guiding and Establishing Nationwide Innovation for US Stablecoins of 2025”, also referred to as the GENIUS Act, would possibly pave the way in which for one more growth for crypto. 

Might it additionally spell a flurry of enterprise capital investments within the stablecoin house?

A New Age of Stablecoin Treasuries?

GENIUS, passed in July 2025, supplies a framework for the bigger adoption of stablecoins. And stablecoins might turn into the rails for a Cambrian explosion of recent crypto functions. 

That’s as a result of as a substitute of counting on outdated, sluggish, and fee-heavy fee banking rails, stablecoins are new, quick and low-cost. 

Nonetheless, it’s new territory, and there are dangers. However the future appears shiny for stablecoins. 

“Probably the most extremely observable, fast-growing pattern to keep watch over is stablecoins,” mentioned David Mort, an early investor in Coinbase and Normal Associate of Propel VC. “Over the following 5 years, we doubtless see exponential progress in stablecoin-linked treasuries and deposits onchain.”

Whole stablecoin market cap since 2018. Supply: DefiLlama

In keeping with DefiLlama, the entire market capitalization for stablecoins is at the moment $272 billion. Tether dominates the house with a $165 billion share of the market cap, adopted by Circle’s USDC at $67 billion and Ethena at $11 billion. 

So, now that corporations have US regulatory rails to experience on, much more progress within the stablecoin market cap might be on the way in which. 

“The GENIUS Act supplies the regulatory stability for the underlying fee rails, which frees up innovators to concentrate on constructing that superior consumer expertise,” mentioned Artem Gordadze, an angel investor in NEAR Basis and advisor at startup accelerator Techstars. 

Contemporary Rails and A Lot of New Belongings

There’s a rush to challenge new stablecoins, which appears to be occurring virtually daily of the week. That is especially from brand names like Bank of America.  

The GENIUS Act requires that fee stablecoins should be backed by high-quality, low-risk belongings like money, Treasury payments, or reserves at Federal Reserve banks. 

That’s all stuff that banks are, nicely, good at. However not each stablecoin is made equal. 

Foundation commerce stablecoins like Ethena are excluded and will face restrictions or de facto outlawing. That’s made Ethena, and also Tether to have particular plans for potential new merchandise tailor-made to the US market. 

The issue is that banks transfer slowly, far more than a startup can. 

As well as, stablecoins are only one a part of making web3 straightforward for customers to undertake. Decreasing blockchain complexity for end-users goes to be an essential element. 

“As for the following technology of shopper web3 apps, we usually tend to catch the following one that appears extra conventional however operates on contemporary rails,” added Propel’s Mort. 

Mort’s “contemporary rails” discuss with utilizing blockchain to facilitate issues that banks and fintechs haven’t wished to do with monetary functions previously. 

New Concepts and Extra Monetary Merchandise Round Stablecoins

New shopper apps will quickly provide micropayments, cross-border transactions, and extra crypto-native components equivalent to swapping, on-chain lending, and staking. 

It’s only a matter of time, famous David Alexander II, associate at crypto VC agency Anagram. 

“Founders now have a tangible framework to construct from so I feel we’ll begin to see highly effective concepts, which had been beforehand sidelined, come to gentle,” mentioned Alexander II. The rise of synthetic intelligence inside web3 apps can also be one thing to be thought-about as nicely. “Probably the most compelling funding thesis is prone to be a shopper app that makes use of AI to supply a extra seamless, clever Web3 expertise,” mentioned angel investor Gordadze. 

Certainly, if web3 apps wish to work like web2 however present extra highly effective options at blockchain’s decrease price, implementing AI could also be an ordinary sooner or later. 

Additionally, it’ll increase the bar for technical founders, as AI requires a particular skillset that some in blockchain could not have. 

“Shopper-facing web3 apps have traditionally struggled with complexity,” added Gordadze. AI is the proper device to unravel this, creating progressive experiences and simplifying complicated DeFi primitives.” 

Extra CLARITY

One aspect of US coverage that also must fall into place, nevertheless, is the CLARITY Act. This piece of laws is framed around digital assets that are not stablecoins, It places non-stablecoin cryptocurrencies right into a commodities bucket, which might be regulated underneath the CFTC. 

“This units the stage for the CLARITY Act, which might have a decidedly highly effective impression on digital belongings and kickstart a brand new wave of programmable finance,” famous Anagram’s Alexander II. 

Over $10 billion of crypto enterprise capital was deployed in the second quarter of 2025. Because of GENIUS, enterprise capitalists appear to know what they’re on the lookout for. 

Relying on market dynamics, and the CLARITY Act, the fourth quarter of 2025 may very well be one for the ages for VC funding within the house. 

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