{"id":14173,"date":"2025-07-19T07:16:25","date_gmt":"2025-07-19T05:16:25","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=14173"},"modified":"2025-07-19T07:16:25","modified_gmt":"2025-07-19T05:16:25","slug":"the-genius-stablecoin-legislation-bans-yield-giving-eth-a-competitive-edge","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/07\/19\/the-genius-stablecoin-legislation-bans-yield-giving-eth-a-competitive-edge\/","title":{"rendered":"The GENIUS Stablecoin Legislation Bans Yield, Giving ETH a Competitive Edge"},"content":{"rendered":"

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The recent US legislation regarding fresh stablecoins may elevate the demand for Ether (ETH<\/a>) and decentralized finance platforms, which largely depend on the Ethereum network, as per analysts.<\/p>\n

The GENIUS bill<\/a>, enacted by US President Donald Trump on Friday, prohibits yield-generating stablecoins<\/a>, eliminating interest-earning options for both institutions and individual traders. This class of stablecoin produces interest or earnings for the owner via yield-generating methods, such as staking or lending.<\/p>\n

Crypto analyst Nic Puckrin noted that the elimination of yield on stablecoins \u201cis excellent news for Ethereum-based DeFi as the primary alternative for generating passive income.”<\/p>\n

Yield can serve as a means of passive income and also to alleviate the impacts of fiat inflation.<\/p>\n

\u201cThe dollar is a depreciating asset devoid of yield,\u201d CoinFund President Christopher Perkins stated to Cointelegraph. \u201cDeFi is where yield can be generated to maintain value. Therefore, I anticipate that stablecoin summer will transition into DeFi summer.\u201d<\/p>\n

Ethereum holds the overwhelming majority of the total value locked within the decentralized finance realm. Source: <\/em>DeFiLlama<\/em><\/a><\/figcaption><\/figure>\n

Yield-generating opportunities<\/a> are appealing to individual investors, and essential for financial institutions that are accountable to shareholders and must produce cash flow or realize gains on capital to honor their fiduciary duties to investors.<\/p>\n

This necessity could have significant ramifications for decentralized finance and could attract more institutional investment into the crypto sector, as these financial entities pursue yield on-chain.<\/p>\n

Related: <\/strong><\/em>Nasdaq submits application to incorporate staking for BlackRock iShares ETH ETF<\/strong><\/em><\/a><\/p>\n

Established interests resist yield-generating fiat-backed stablecoins<\/h2>\n

During the DC Blockchain Summit in March, US Senator Kirsten Gillibrand remarked that yield-bearing stablecoins could destroy the traditional banking industry<\/a>.<\/p>\n

The senator contended that private stablecoin issuers transmitting interest opportunities to their customers would weaken the loan market and diminish demand for traditional banking services.<\/p>\n

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First page of the GENIUS stablecoin legislation. Source: <\/em>US Senate<\/em><\/a><\/figcaption><\/figure>\n

Gillibrand inquired, \u201cIf there is no incentive to deposit your funds in a local bank, who will provide you a mortgage?\u201d<\/p>\n

New York University educator Austin Campbell countered the banking sector in a May X post<\/a>, asserting that traditional banks are threatened by yield-generating stablecoins<\/a>, as they have the potential to diminish banking profits. Campbell remarked that lawmakers opposing interest-bearing tokens were engaging in \u201ccartel protection.\u201d<\/p>\n

The heightened competition from these yield-generating fiat tokens will ultimately supplant conventional stablecoins altogether, as indicated by Tether co-founder Reeve Collins.<\/p>\n

\u201cIf you are confident that both fiat-backed and synthetic tokens are stable, then you will always be drawn to the one that provides a higher yield,\u201d Collins conveyed to Cointelegraph.<\/p>\n

Magazine: <\/strong><\/em>TradFi is developing Ethereum L2s to tokenize trillions in RWAs: Inside stor<\/strong><\/em><\/a>y<\/strong><\/em><\/p>\n