Trump’s New Law Sparks Bank Stampede Into $264B Stablecoin Gold Rush

Wall Street just found its new favorite casino chip—and it's backed by the US dollar.

Banks are diving headfirst into the $264 billion stablecoin market after former President Trump's surprise legislation greenlights institutional participation. Finally, they've found a 'disruptive' asset class they can tame with regulation.

The land grab is on

JPMorgan to Bank of America are reportedly scrambling to build custody solutions and yield products. Because nothing inspires innovation like watching crypto startups eat your lunch for a decade.

Stablecoins: Too big to ignore, too profitable to resist

The sector's explosive growth—now representing 15% of total crypto market cap—has turned skeptics into converts. Even as purists sneer at the irony of banks colonizing crypto's most compliant corner.

One hedge fund manager quipped: 'They'll charge 2% management fees on dollar-pegged tokens while calling it financial inclusion.' The more things change...

TLDR

• The GENIUS Act became law on July 18, creating the first federal regulatory framework for fiat-backed stablecoins in the US
• Stablecoin market cap surged nearly $4 billion in seven days following the legislation, reaching over $264 billion total
• Major institutions including Bank of America, JPMorgan, and Citigroup are now preparing to enter the stablecoin market
• The law requires stablecoins to be fully backed by cash or short-term US Treasuries with mandatory monthly audits
• Algorithmic stablecoins face a two-year freeze while regulators develop separate rules for this category

The crypto industry experienced a massive $4 billion surge in stablecoin supply within just one week of the GENIUS Act becoming law. The legislation, signed by President Trump on July 18, 2025, created the first comprehensive federal framework for payment stablecoins in the United States.

The law emerged after intense political negotiations, requiring bipartisan support to overcome opposition from conservative Republicans and skeptical Democrats. Lawmakers ultimately secured passage by strengthening consumer protections and attaching language from the Anti-CBDC Surveillance State Act to a defense bill.

Under the new regulations, stablecoin issuers must choose between obtaining a federal charter or working with state regulators whose programs receive federal approval. Companies handling under $10 billion in circulation can operate at the state level if their regulatory framework meets federal standards.

The law mandates that all payment stablecoins maintain full 1:1 backing through cash or short-term US Treasury securities. Issuers cannot lend out or repurpose these reserve assets under any circumstances.

Banking Giants Enter the Stablecoin Space

Within days of the law’s enactment, major financial institutions announced their stablecoin plans. Bank of America CEO Brian Moynihan confirmed the bank is exploring dollar-backed stablecoin issuance, pending complete regulatory alignment under the GENIUS Act.

JPMorgan and Citigroup also confirmed preparations to enter the stablecoin market. These moves represent a shift as traditional banks previously remained cautious about crypto-related products due to regulatory uncertainty.

Anchorage Digital, the only federally chartered crypto bank in the US, launched a stablecoin issuance platform on Tuesday in partnership with Ethena Labs. The initiative brings Ethena’s USDtb stablecoin under the new regulatory framework.

WisdomTree became one of the first asset managers to enter the regulated stablecoin space by launching USDW, a dollar-backed stablecoin designed for dividend-paying tokenized assets. The product complies with GENIUS Act standards from launch.

Different Stablecoin Types Face Varying Futures

The legislation creates different paths for various stablecoin categories. Fiat-backed stablecoins, which represent roughly 85% of the current market, receive clear regulatory approval under the new framework.

Tether’s USDT, the largest stablecoin with over $100 billion in circulation, faces the most challenging compliance path. The company must overhaul its reserve structure, which currently includes mixed assets beyond cash and treasuries.

Circle’s USDC appears better positioned for compliance, as its reserves already consist primarily of cash and government debt. However, the company must still enhance its reporting and auditing processes to meet monthly certification requirements.

DAI presents unique challenges as a decentralized stablecoin backed by various crypto assets through smart contracts. The law’s focus on cash and treasury backing creates uncertainty about DAI’s future within the official US financial system.

Algorithmic stablecoins face a two-year development freeze while regulators study this category separately. This decision reflects lessons learned from the Terra ecosystem collapse that highlighted risks in algorithmic stability mechanisms.

The law explicitly removes the Securities and Exchange Commission and Commodity Futures Trading Commission from primary oversight of payment stablecoins. Instead, the Office of the Comptroller of the Currency and Federal Reserve assume primary regulatory authority.

Monthly transparency requirements mandate that issuers publish certified breakdowns of their reserves with CEO and CFO sign-offs. Independent accounting firms must verify these reports, creating stricter oversight than current industry practices.

Stablecoin issuers now qualify as “financial institutions” under the law, requiring comprehensive anti-money laundering and sanctions compliance programs. This classification brings stablecoins fully within traditional banking regulatory frameworks.

The stablecoin market capitalization now exceeds $264 billion, with the recent $4 billion surge demonstrating immediate market response to regulatory clarity.