The first half of 2025 has been one of the most bullish periods for the crypto asset class. A key driver of this momentum has been the wave of regulatory progress around stablecoins and, more importantly, the smart contract platforms (e.g., Ethereum, Solana) that power them.

These developments mark a major turning point not just for digital dollars, but for the underlying infrastructure of programmable money itself. By creating clearer legal frameworks for stablecoins, regulators are inadvertently laying the groundwork for the broader adoption of smart contracts—a shift with far-reaching implications across finance and technology.

Stablecoins, which rely on smart contract platforms like Ethereum and Solana for their infrastructure, have emerged as a cornerstone of the cryptocurrency ecosystem. The past month has only helped further strengthen their role in the global economy as significant regulatory, market, and technological developments have solidified stablecoins as a transformative force in finance, presenting a compelling opportunity for investors. Following are four major implications of these recent developments.

 

 

1. Regulatory clarity is reducing risk

 

The most pivotal development in June was the US Senate’s passage of the GENIUS Act with a bipartisan 68–30 vote. This landmark legislation establishes the first comprehensive federal regulatory framework for US dollar–pegged stablecoins, requiring full reserve backing, monthly audits, anti-money laundering (AML) compliance, and federal licensing. By limiting the ability to issue stablecoins without regulatory approval and enhancing consumer protections, the GENIUS Act legitimizes stablecoins as a trusted financial instrument. The bill awaits House approval, with expectations that it will pass this month and be signed into law by August.

The GENIUS Act’s guardrails ensure stablecoin issuers operate with transparency and stability, mitigating concerns about reserve mismanagement and de-pegging events—such as those experienced by Tether in 2022 and USDC in 2023—which stemmed in part from reliance on less-liquid collateral and banking counterparties. These requirements raise the bar for compliance, auditing, and overall risk management, encouraging broader adoption by both individuals and institutions.

Globally, regulatory frameworks are aligning. The EU’s Markets in Crypto-Assets (MiCA) regulation mandates strict reserve and transparency requirements for stablecoin issuers, boosting investor confidence. Hong Kong’s Stablecoin Bill, passed in May 2025, enables major financial institutions to become licensed issuers, further integrating stablecoins into traditional finance. These developments reduce regulatory uncertainty—a key barrier for institutional investors—and position stablecoins as a tool to reinforce the dollar’s global dominance while expanding their role in compliant financial infrastructure.

 

 

2. Institutional adoption is accelerating 

 

Stablecoin market capitalization has surged to $250 billion, up from $20 billion in 2020. Treasury Secretary Bessent recently suggested that this could become a $3.7 trillion market within five years. While Tether (USDT) and Circle (USDC) currently account for most of the market, new entrants like PayPal’s PYUSD and JPMorgan’s JPMD signal growing institutional interest.

 

^{Source: Hashdex Asset Management with data from Visa (from June 1, 2023 to June 16, 2025).}

 

Major players like Stripe, Visa, and Shopify have integrated stablecoin payments, with Stripe enabling USDC-based merchant transactions at half the cost of card payments. Bank of America and Standard Chartered are exploring stablecoin issuance, while JPMD, launched on Coinbase’s Base Ethereum Layer-2, targets institutional clients with 24/7 settlement and interest-bearing features. These moves reflect a shift from skepticism to strategic integration, as traditional finance recognizes stablecoins’ efficiency in cross-border payments and treasury management.

The Bitcoin 2025 conference in Las Vegas highlighted stablecoins’ prominence, with US officials like Vice President JD Vance and Senator Cynthia Lummis endorsing their role in financial innovation. Tether’s CEO, Paolo Ardoino, predicted that commodity trading firms will drive adoption over the next five years, leveraging stablecoins for efficient B2B transactions. This corporate embrace underscores stablecoins’ real-world utility, a critical factor for investors seeking tangible value beyond speculative gains.

Stablecoins use as a “cash-management tool” allows seamless transitions between crypto and fiat positions, while yield-bearing stablecoins (e.g., Ethena’s USDe, Ondo’s USDY) provide passive income akin to money-market funds, with annual yields often exceeding traditional fixed-income assets.

 

 

3. Economic and geopolitical tailwinds continue to blow

 

Stablecoins are uniquely positioned to benefit from macroeconomic and geopolitical trends. The US Treasury and many policymakers have noted that stablecoin issuers, now among the top buyers of US Treasuries, could increase demand for short-term government debt, potentially stabilizing the Treasury market. This dynamic aligns stablecoin investments with portfolios seeking exposure to US economic resilience.

 

Globally, stablecoins address inefficiencies in cross-border payments, particularly in emerging markets with unreliable banking systems. These trends highlight stablecoins’ role in financial inclusion, a compelling narrative for impact-focused investors. At the same time, the US dollar’s status as the world’s reserve currency is further entrenched by stablecoin adoption. This geopolitical advantage appeals to investors prioritizing long-term currency stability.

 

 

4. Infrastructure is advancing 

 

Technological developments in the first half of 2025 also bolster stablecoins’ investment case. Circle, issuer of USDC, launched a payments network targeting Visa and Mastercard’s dominance and minted $250M USDC on Solana, enhancing scalability. Other partnerships are helping to integrate USDC into core banking systems and B2B transactions, bridging traditional and digital finance. 

Infrastructure readiness will be a key driver of adoption as well. A Fireblocks survey in March 2025 found that 86% of financial institutions report stablecoin-ready infrastructure, shifting focus from pilots to execution. And for tech-savvy investors, stablecoins’ interoperability with decentralized finance (DeFi) protocols offers additional yield opportunities. 

 

 

An improving investment case for crypto assets and smart contract platforms

Together, these four factors will help push stablecoin adoption to new highs in the coming months and years. For investors wondering how they can benefit from this growth, it’s important to keep in mind the necessary role that many crypto assets powering programmable blockchains will play in supporting the payment rails and other infrastructure needed to fuel stablecoins. As Ethereum, Solana and many other smart contract platforms gradually  benefit from stablecoin growth, investors with broad exposure to crypto can benefit from this demand and position themselves at the forefront of digital finance’s next chapter.

 

 

 

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