The recently passed US GENIUS Act, while celebrated for promoting stablecoin adoption, may hinder the appeal of digital dollars by banning yield-bearing stablecoins. This restriction could disadvantage stablecoins in comparison to money market funds (MMFs), especially as financial institutions push for these traditional assets to be tokenized. Experts warn that the GENIUS Act, by preventing stablecoin issuers from offering yield, protects the competitive edge of MMFs, which can now provide similar features to stablecoins while offering interest. Consequently, tokenized MMFs could thrive, presenting more attractive options for investors. Despite this setback for stablecoins, they retain advantages like their status as bearer assets, enabling easier access to decentralized finance (DeFi) services without complex management. The increase in lobbying from the banking sector against yield-bearing stablecoins has raised concerns about the implications of this legislation on the broader financial landscape, pointing to an ongoing struggle between traditional finance and emerging digital asset paradigms.

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