Web3 has not gained freedom; it has merely changed its regulators.

Written by: Sanqing

🇺🇸 Stablecoin Legislation Breakthrough: GENIUS Act Passes Procedural Vote in Senate

[Washington, May 19, 2025] — The U.S. Senate passed the procedural vote for the "U.S. Stablecoin National Innovation Act" (GENIUS Act) on Monday evening with a result of 66 votes in favor and 32 against, clearing the largest obstacle for the bill's final passage. This legislation establishes a comprehensive federal regulatory framework for the issuance, reserves, redemption, compliance, and consumer protection of stablecoins in the United States.

The bill originally faced political resistance due to its ties to the cryptocurrency business interests of former President Trump's family and failed to enter the voting process in early May. After amendments were made to the provisions, including restrictions on foreign issuers and prohibiting large tech companies from dominating stablecoin issuance, some moderate lawmakers shifted their support, allowing the bill to surpass the Senate's procedural threshold of 60 votes. A final Senate vote is expected this week, after which it will be sent to the House of Representatives for consideration.

Overview of the Bill: Under the Name of "Stability," It Enacts Regulation

The GENIUS Act clearly defines stablecoins as "digital assets that promise to be redeemed at a fixed amount for payment and settlement," excluding forms such as central bank digital currencies and bank deposits.

Core Provisions of the GENIUS Act at a Glance

Once passed, compliant stablecoin issuers like Circle (USDC) and PayPal (PYUSD) will benefit, while entities like Tether (USDT) and most DeFi structural stablecoin projects (such as RAI, USDe) may face legitimacy crises in the U.S. market.

Background Deepening: The Moment of Certainty for On-Chain Dollars

Structurally, the GENIUS Act is not a tolerance of stablecoins but a systematic confirmation of dollar sovereignty in the blockchain space, representing an American expansion of digital currency. By legalizing compliant stablecoins, it extends the dollar's issuance rights into the Web3 ecosystem: although the on-chain settlement unit is issued by Circle, it essentially acts as a "clearing bank for on-chain dollars."

This means:

• The dollar becomes the pricing benchmark for all on-chain assets, with control remaining in the Federal Reserve system;

• Compliant stablecoins gain clearing privileges, while other algorithmic stablecoins and structured financial tokens will be marginalized or exit the U.S. market;

• Web3 is losing its potential as an "independent value system," gradually being incorporated into the digital extension of dollar hegemony.

The GENIUS Act is transforming blockchain from a "currency-neutral platform" into a "settlement appendage of the dollar."

Deep Impact on Web3 and Decentralized Finance

Decentralized Vision vs. Compliance Reality

1. DeFi Yield-bearing Assets Marginalized:

Prohibiting "interest payments" means structural stablecoins will struggle to survive. Designs like sDAI and USDe may face securitization risks, eroding the core business logic of DeFi.

2. KYC Compliance Forces Centralization of DApps:

The compliance of stablecoin usage will compel DApps to introduce AML/KYC mechanisms, contradicting the original intent of decentralization, and DAOs may have to legally establish representative entities.

3. Highly Centralized Stablecoin Market:

Stablecoins like USDC and PYUSD, which have U.S. regulatory "passports," will absorb market liquidity, increasing costs for new projects and raising innovation barriers.

4. On-chain Collaborative Units Struggle to Form Closed-loop Economies:

Projects like PAYFi, which attempt to build non-pegged value units, will find it difficult to gain mainstream user trust due to a lack of fiat currency exit, facing credit bottlenecks in closed-loop economies.

5. "Financial Resistance Laboratories" Being Reincorporated as "Digital Dollar Interfaces":

The GENIUS Act signifies that Web3 is no longer seen as a threat to the old order but is forced to become a submodule of its infrastructure. This is not a disruption of hegemony but a "protocolized extension."

Conclusion: From Gray Area Currency to Permitted Finance, Is Compromise the Next Step for Web3?

The GENIUS Act is a milestone in stablecoin legislation and a confirmation of "the dollar as a global value anchor" on-chain. In the short term, it enhances compliance clarity and opens the door for institutional entry; in the long term, it builds a firewall for the value system, making Web3 increasingly resemble TradFi and less like the world it originally aimed to replace.

If Bitcoin once dreamed of breaking the monopoly of sovereign currencies, the GENIUS Act declares:

Currency has not been reconstructed; it has merely been put on-chain; Web3 has not gained freedom; it has merely changed its regulators.

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