Bitcoin vs stablecoins showdown looms as GENIUS Act nears

There’s been an unprecedented tailwind in Washington DC this yr for stablecoins. From the embrace of the property by politicians and the trade to the GENIUS stablecoin laws passing the Senate, 2025 marks an necessary turning level.  

Treasury Secretary Scott Bessent even tasked stablecoins with nothing much less necessary than making certain the dollar stays the world’s primary foreign money. “As President Trump has directed, we’re going to preserve the US the dominant reserve foreign money on this planet, and we’ll use stablecoins to try this,” he mentioned on the Digital Property Summit in March.

Which is why it’s virtually weird to appreciate that stablecoins are a descendant of Bitcoin — a decentralized foreign money designed to stage the enjoying area in a world of rigged centralized banking methods and overzealous governments. Stablecoins and Bitcoin would appear to have two irreconcilable goals — the previous helps the present fiat primarily based monetary system and the latter desires to overthrow it.

So what occurs as soon as the GENIUS Act is enacted? Are we headed for a showdown between stablecoins and Bitcoin?

FalconX Head of Analysis David Lawant says that’s most likely the fallacious approach to consider it… a minimum of within the quick time period. 

“Reasonably than competing, the 2 can complement one another,” Lawant tells Journal. 

“As finance turns into more and more digital, it is smart to have each a digital fiat equal for transactions and a digital gold equal for storing worth.”

Bitcoin and stablecoins aren’t going for a similar pie

Bitcoin Coverage Institute head of coverage Zack Shapiro agrees, saying that Bitcoin and stablecoins are “basically completely different” with non-competing promoting factors. 

“Stablecoins are dollar-denominated property that stay on blockchains, enabling fiat to maneuver extra effectively over the web, akin to digitized money that settles shortly and cheaply. They remedy inefficiencies within the conventional banking system, the place settlement can take days and contain a number of intermediaries,” he explains. 

Whereas they share blockchain infrastructure with Bitcoin, that is the place the similarities finish, he provides.

“Bitcoin is a radically new type of cash—decentralized, scarce, censorship-resistant, and ruled by code, not coverage. It’s higher understood as a digital commodity or a financial asset like gold, whereas stablecoins are merely tokenized representations of fiat foreign money, functioning extra like cost infrastructure than a brand new asset class.”

Additionally learn: GENIUS Act reopens the door for a Meta stablecoin, however will it work?

Stablecoins may even assist Bitcoin 

The Guiding and Establishing Nationwide Innovation for U.S. Stablecoins (GENIUS) Act, which establishes a transparent authorized framework for stablecoins, is making its approach by means of the US Congress and is anticipated to succeed in Trump’s desk by August, in response to Galaxy Head of Analysis Alex Thorn.

Following the passage of the GENIUS Act within the US Senate, US President Donald Trump claimed, “That is American Brilliance at its greatest, and we’re going to present the World easy methods to WIN with Digital Property like by no means earlier than!”

The invoice lays the groundwork for a complete oversight system surrounding stablecoins pegged to the US greenback. A key function of the laws is its strict standards for who can difficulty these stablecoins: solely federally or state-qualified entities, or subsidiaries of insured depository establishments.

It mandates one-to-one reserve backing of stablecoins with US foreign money or equally liquid property, and notably, stablecoins beneath this invoice are excluded from being handled as securities. 

“The GENIUS Act is an inexpensive, bipartisan invoice that displays a realistic step ahead in digital asset regulation,” says Shapiro.

“Whereas stablecoins are already authorized beneath present US legislation, the invoice would improve client protections […] and would supply long-term regulatory readability for establishments that wish to use stablecoins for funds infrastructure. 

“It’s particularly priceless in decreasing regulatory uncertainty for conventional monetary gamers which might be at the moment hesitant to have interaction.”

Nevertheless, Shapiro notes the invoice received’t have a direct impact on Bitcoin. 

“However its passage might bolster the notion, each domestically and internationally, that the US is embracing digital property in a bipartisan, rules-based method,” he says. 

“That notion could generate a modest tailwind for Bitcoin as a part of a broader legitimization of the house.”

Based on Lawant, Bitcoin and stablecoins will coexist and develop in a mutually reinforcing approach. He particularly pointed to Taproot Property as a improvement that must be watched carefully. Taproot Property are a approach of utilizing non-bitcoin tokens, corresponding to stablecoins, on Bitcoin and the Lightning Community. Curiously, Tether started on Bitcoin’s Omni layer again in 2014.

On the latest Bitcoin 2025 convention in Las Vegas in Could, Tether CEO Paolo Ardoino argued out that channel-based methods just like the Lightning Community, and never the layer-2 networks discovered on various blockchains like Ethereum, are the proper strategy to scaling.

Tether CEO @paoloardoino says the entire L2s on altchains are usually not scalable and channel-based approaches like Bitcoin’s Lightning Community are the proper strategy. pic.twitter.com/EyApy60qp4

— Bitcoin Analysis (@kyletorpey) Could 29, 2025

“Stablecoins additionally play a key position in increasing Bitcoin adoption,” mentioned Lawant. “For a lot of customers, stablecoins’ lack of fiat worth volatility makes them a extra acquainted on-ramp to digital pockets infrastructure and possibly even to blockchain-based finance. This will ultimately cause them to discover Bitcoin.”

Tether eyes the GENIUS Act carefully 

Stablecoin issuers, corresponding to Tether, whose Tether (USDT) stablecoin has grown to greater than $150 billion in dimension, are getting extra comfy with the GENIUS Act, as Ardoino instructed Bloomberg in Could. Tether could launch an offshoot for the US market to make sure compliance with the laws.

Tether could also be the most effective real-world illustration of how Bitcoin and stablecoins cannot solely coexist however thrive collectively. 

The stablecoin issuer is thought to place a portion of the curiosity earned from its US treasury bond holdings and different sources of revenue into Bitcoin. 

A Tether spokesperson tells Journal it views “Bitcoin because the cornerstone of a decentralized monetary future,” pointing to its accumulation of 100,000 Bitcoin for its treasury and its sustainable Bitcoin mining operations.

“In lots of rising markets, USDT has develop into a necessary software within the face of financial instability and foreign money depreciation, usually serving as a dependable hedge in opposition to inflation,” says the spokesperson. 

“Whereas USDT delivers rapid monetary stability, Bitcoin represents long-term sovereignty, and I do consider in its long-term position as a worldwide reserve asset.”

Shapiro additionally sees an identical interaction between the 2.

“Within the US, stablecoins will possible be used behind the scenes by banks, fintechs, and cost processors to enhance effectivity, usually with out the end-user even understanding they’re interacting with blockchain know-how.

Stablecoins could even act as a gateway foreign money to Bitcoin. Over time, direct client publicity to stablecoins and digital wallets might function a delicate onboarding mechanism to broader digital asset adoption, together with Bitcoin. 

“We view stablecoins not as the top aim, however as a foundational gateway towards the broader adoption of decentralized property like Bitcoin,” says Tether’s spokesperson. 

“That’s why we spend money on Bitcoin and again academic initiatives that equip communities all over the world with the data to make use of digital property properly and confidently.”

Exterior the US — particularly within the world south — stablecoins (primarily Tether) usually function essential entry to US {dollars} in locations the place bodily money or financial institution accounts are unavailable. 

“There, they perform as a short-term, low-volatility retailer of worth, whereas Bitcoin serves as a long-term hedge in opposition to native foreign money collapse or political instability. In that context, stablecoins and Bitcoin complement one another as ‘risk-off’ and ‘risk-on’ instruments for monetary sovereignty.”

Additionally learn: Unstablecoins — Depegging, financial institution runs and different dangers loom

What’s the endgame for Bitcoin vs stablecoins?

Opinions differ on what the top end result can be as Bitcoin and stablecoins proceed to develop alongside one another over time.

Greater than a decade in the past, Jal Toorey proposed that Bitcoin might function the usual or superb foundation from John Forbes Nash Jr’s idea of Ideally suited Cash in opposition to which fiat currencies are measured and incentivized to enhance. 

However Bitcoin megabull and Technique government chairman Michael Saylor has indicated that the last word endgame will not be a scenario the place Bitcoin replaces the US greenback.

In a presentation at Bitcoin 2025, The Bitcoin Normal writer Saifedean Ammous outlined a possible situation the place Tether ultimately holds extra Bitcoin in reserve than US {dollars} or greenback equivalents. 

From this attitude, Tether appears extra just like the kind of Bitcoin financial institution cypherpunk Hal Finney as soon as theorized about issuing its personal notes in opposition to its reserves slightly than merely a know-how for the propagation of the US greenback. 

It’s additionally just like Meta’s authentic intention with the Diem stablecoin idea, because it was thought that the digital foreign money may very well be backed by a basket of fiat currencies slightly than having a easy peg to the US greenback.

#Bitcoin & Tether Full Discuss with @saifedean pic.twitter.com/pgDZuRgs9z

— TFTC (@TFTC21) Could 30, 2025

“At Tether, we’ve made Bitcoin a core a part of our technique as a result of we consider in its long-term worth. As the toughest type of cash ever created, Bitcoin has outperformed each asset class over the previous decade, and its adoption as a reserve asset is barely accelerating.”

“Its capacity to perform as a hedge in opposition to inflation and financial uncertainty makes it a pure complement to conventional reserves like gold and US Treasurys,” the spokesperson provides. 

“Saifedean provides a compelling imaginative and prescient of the place world finance may very well be headed, and we agree that Bitcoin will play a central position in that future.” 

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Kyle Torpey

Kyle Torpey has been protecting Bitcoin and crypto since 2014. Notably, he lined Bitcoin’s blocksize battle at Bitcoin Journal and Forbes. Through the years, his work has additionally been revealed in Fortune, Vice, Investopedia, and plenty of different media shops