Stablecoins are now legal under President Trump’s GENIUS Act, which also mandates that they be backed by US dollars or Treasury bonds. The demand for dollar-backed assets will rise as a result, potentially solidifying the dollar’s position as a reserve currency. This has led to a little recovery in the value of the U.S. dollar and an increase in both Bitcoin and Ether.
The value of Bitcoin has increased. Ether is up. The dollar is also slightly higher. If, like many cryptocurrency enthusiasts, you think that the Trump Administration’s regulatory backing for cryptocurrencies would transform digital payments, these things may be connected.
This morning, the price of Bitcoin was just under $119K, up 1.27%. In just five days, ETH experienced a dramatic increase of over 12%. These victories coincided with President Trump’s signing of the GENIUS Act, which makes stablecoins legal. Cryptocurrencies known as stablecoins hold their value at a 1:1 ratio to fiat money, typically the US dollar.
In particular, the GENIUS Act mandates any stablecoins in the United States be backed by either U.S. Treasuries or dollars. As a result, stablecoin issuers will be locked into demand for dollars and short-term U.S. bonds, which will support the dollar and bond prices.
At the start of the month, the U.S. dollar was down 10.8% year-to-date; however, it has since recovered and is currently down just 9.39%.
Analysts Marion Laboure and Camilla Siazon of Deutsche Bank informed clients that the act “formalizes stablecoin issuers’ role as quasi money market funds, supporting US short-term debt markets, and channeling non-USD liquidity into dollars.” This has been viewed as a victory for the Trump administration at a time when the US dollar’s hegemony is being questioned. Trump confirmed on Friday that the GENIUS Act would “secure the dollar’s status as the world reserve currency,” adding that it would be like the US “losing a world war” if it were to lose its reserve status.
The size of the cryptocurrency market to raise the value of the dollar is still up in the air. But according to Siazon and Laboure, it may be. As of the first quarter of 2025, Tether alone possessed more over $120 billion in Treasury notes, placing it in the top tier of US Treasury holdings.
They stated that the US Treasury projects that by 2028, the total value of T-bills held by stablecoin issuers—apart from interest-bearing stablecoins—will reach approximately $1 trillion.
Stablecoin issuers are likewise prohibited by the statute from providing holders with “yield.” When someone provides their cryptocurrency holdings as a loan to borrowers on a cryptocurrency exchange, they receive yield, which is a stream of payments that resembles interest in the crypto world. Crypto investors appear to be flooding into Ethereum, which has long provided yield payments to anybody willing to “stake” their currencies as a security on the Etherium network, while stablecoins will not be able to pay holders. (Staking entails giving new Ethereum to those who approve legitimate transactions while penalizing those who approve fraudulent ones on the blockchain.)
This might explain why Ether rose last week, as predictions of lower stablecoin returns drive interest in Ethereum as the principal option for yield creation in decentralized finance,” the duo added.
