The Congress can approve the most consistent cryptographic law of the decade of this week, while attracting a brilliant red line through one of the darkest gray areas of defi: stable with performance.
At first glance, Genius law seems to be a direct regulatory victory. Finally, it will grant more than $ 120 billion in Stablecoins backed by Fiat a legal track, establishing clear railings for what qualifies as a compatible payment payment.
But it falls into the details and it is clear that this is not a wide green light. In fact, according to the rigorous requirements of the law (segregated reserves, high quality liquid assets, GAAP, only about 15% of today’s stable would really make the cut.
More dramatically, the law explicitly prohibits Stablecoins to pay interest or yields. This is the first time that US legislators have drawn a hard line between Stablecoins as payment instruments and stablecoins as performance assets. During the night, it revolves decades of cryptographic experimentation in his head, pushing to evolve or risk sliding again in the shadows.
A difficult stop for stable that support performance
For years, Defi tried to have it both ways: to offer “stable” assets that generated silent yields, while dodging the treatment of values. The genius act ends that ambiguity. According to the new law, any stable payment yield, either directly through the rethinking mechanics or indirectly through pseudo-definitive savings accounts, is now firmly outside the perimeter it meets. In summary, the stablecoins that support the performance were orphaned.
Congress frames this as a way of protecting US banks. By prohibiting Stablecoin’s interest, legislators hope to prevent Billions from fleeing traditional deposits, which subscribe loans to small businesses and consumers. Maintaining Stablecoins performance retains the basic plumbing of the US credit system.
But there is a deeper change in progress. This is no longer just a compliance question. It is a total rethinking of collateral credibility on scale.
Treasury and monetary reflexivity
Under the genius, all the stable of composition must be backed by cash and in the T -networks with maturities of less than 93 days. That effectively inclines Crypto’s reserve strategy towards the United States fiscal instruments in the short term, integrating defi deeper into the US monetary policy of what most people are ready to admit.
We are currently talking about a market of around $ 28.7 billion in a pending marketable debt. At the same time, the Stablecoin market exceeds $ 250 billion in circulation. Therefore, even if only half of that (around $ 125 billion) Pivot in the short -term treasure bonds, represents a substantial change, pushing cryptographic liquidity directly to the US debt markets.
During normal times, that maintains the buzzing system. But in the case of a tariff shock, those same flows could be reversed violently, triggering liquidity abdominals in loan protocols used by USDC or USDP as the so -called “risk -free leg.”
It is a new type of monetary reflexivity: Defi now moves synchronized with the health of the treasure market. That is both stabilizer and a new system of systemic risk.
Why this could be the healthiest moment for defi
Here is the irony: by prohibiting the performance of Stablecoin, the genius law could lead defi in a more transparent and lasting direction.
Without the ability to embed the performance directly in the stables, the protocols are forced to build performance externally. That means using Delta-Delta neutral strategies, arbitration funds, dynamic cover rethinking or open liquidity groups where anyone is auditable for anyone. Change the contest of “Who can promise the highest APY?” “Who can build the most intelligent and resistant risk engine?”
It also draws new graves. The protocols that adopt intelligent compliance, through the inlays of AML rails, certification layers and tokens flow white, will unlock this emerging capital corridor and the institutional liquidity of TAP.
Everyone else? Segregated on the other side of the regulatory fence, hoping that shadow money markets can sustain them.
The majority of the founders underestimate the speed with which the cryptocurrencies of the markets rebuke the regulatory risk. In traditional finance, policy shapes the cost of capital. In defi, it will now be shaped access to the capital. Those who ignore these lines will see the associations flash, the listings disappear and leave liquidity evaporate as the regulation filters in silence who can remain in the game.
Long view includes crimer lines, stronger systems
Genius law is not Defi’s end, but a certain illusion ends that passive performance could simply place in the stable of stables indefinitely, without transparency or compensation. From now on, these yields have to come from some real place, with guarantees, revelations and rigorous stress tests.
That could be the healthiest decentralized financing of pivotos could do in their current state. Because if you are going to complement, or even compete with traditional financial systems, you cannot trust blurred lines and gray regulatory areas. It has to demonstrate exactly where the performance comes from, how it is handled and who has the final risk.
Genius law has just done this law. And in the long run, that could be one of the best things that happened to this industry.
