The “Guiding and Establishing National Innovation for US Stablecoins of 2025”, also known as the GENIUS Act, might pave the way for yet another boom for crypto.
Could it also spell a flurry of venture capital investments in the stablecoin space?
A New Age of Stablecoin Treasuries?
GENIUS, passed in July 2025, provides a framework for the larger adoption of stablecoins. And stablecoins could become the rails for a Cambrian explosion of new crypto applications.
That’s because instead of relying on old, slow, and fee-heavy payment banking rails, stablecoins are new, fast and cheap.
However, it’s new territory, and there are risks. But the future seems bright for stablecoins.
“The most highly observable, fast-growing trend to keep an eye on is stablecoins,” said David Mort, an early investor in Coinbase and General Partner of Propel VC. “Over the next five years, we likely see exponential growth in stablecoin-linked treasuries and deposits onchain.”
Total stablecoin market cap since 2018. Source: DefiLlama
According to DefiLlama, the total market capitalization for stablecoins is currently $272 billion. Tether dominates the space with a $165 billion share of the market cap, followed by Circle’s USDC at $67 billion and Ethena at $11 billion.
So, now that companies have US regulatory rails to ride on, even more growth in the stablecoin market cap is probably on the way.
“The GENIUS Act provides the regulatory stability for the underlying payment rails, which frees up innovators to focus on building that superior user experience,” said Artem Gordadze, an angel investor in NEAR Foundation and advisor at startup accelerator Techstars.
Fresh Rails and A Lot of New Assets
There’s a rush to issue new stablecoins, which seems to be occurring almost every day of the week. This is especially from brand names like Bank of America.
The GENIUS Act requires that payment stablecoins must be backed by high-quality, low-risk assets like cash, Treasury bills, or reserves at Federal Reserve banks.
That’s all stuff that banks are, well, good at. But not every stablecoin is made equal.
Basis trade stablecoins like Ethena are excluded and could face restrictions or de facto outlawing. That’s made Ethena, and also Tether to have specific plans for potential new products tailored to the US market.
The top ten stablecoins ranked by market cap. Source: CoinGecko
The problem is that banks move slowly, much more than a startup can.
In addition, stablecoins are just one part of making web3 easy for users to adopt. Reducing blockchain complexity for end-users is going to be an important component.
“As for the next generation of consumer web3 apps, we are more likely to catch the next one that looks more traditional but operates on fresh rails,” added Propel’s Mort.
Mort’s “fresh rails” refer to using blockchain to facilitate things that banks and fintechs have not wanted to do with financial applications in the past.
New Ideas and More Financial Products Around Stablecoins
New consumer apps will soon offer micropayments, cross-border transactions, and more crypto-native elements such as swapping, on-chain lending, and staking.
It’s just a matter of time, noted David Alexander II, partner at crypto VC firm Anagram.
“Founders now have a tangible framework to build from so I think we’ll start to see powerful ideas, which were previously sidelined, come to light,” said Alexander II. The rise of artificial intelligence within web3 apps is also something to be considered as well. “The most compelling investment thesis is likely to be a consumer app that uses AI to offer a more seamless, intelligent Web3 experience,” said angel investor Gordadze.
Indeed, if web3 apps want to work like web2 but provide more powerful features at blockchain’s lower cost, implementing AI may be a standard in the future.
Also, it will raise the bar for technical founders, as AI requires a specific skillset that some in blockchain may not have.
“Consumer-facing web3 apps have historically struggled with complexity,” added Gordadze. AI is the perfect tool to solve this, creating innovative experiences and simplifying complex DeFi primitives.”
More CLARITY
One element of US policy that still needs to fall into place, however, is the CLARITY Act. This piece of legislation is framed around digital assets that are not stablecoins, It puts non-stablecoin cryptocurrencies into a commodities bucket, which would be regulated under the CFTC.
“This sets the stage for the CLARITY Act, which could have a decidedly powerful impact on digital assets and kickstart a new wave of programmable finance,” noted Anagram’s Alexander II.
Over $10 billion of crypto venture capital was deployed in the second quarter of 2025. As a result of GENIUS, venture capitalists seem to know what they are looking for.
Depending on market dynamics, and the CLARITY Act, the fourth quarter of 2025 could be one for the ages for VC funding in the space.
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