The unintended effect of the "GENIUS Act": the stablecoin yield ban may act as a catalyst for the rise of Decentralized Finance, while banks getting on board will attract a massive number of users.

The United States "Stablecoin Innovation and User Safety Act" (GENIUS Act) is promoting the global adoption of stablecoins, while its core provision—prohibiting the payment of interest on stablecoin issuance to holders—is producing unexpected ripple effects. This restriction, while hindering institutions and mature investors from earning passive income through stablecoins, may direct trillions of dollars towards the Decentralized Finance (DeFi) sector in search of "real returns." Experts point out that DeFi, with its programmable yield mechanisms, transparent protocols, and innovative financial tools, is becoming the best alternative in a context where compliant stablecoins cannot provide yields. At the same time, the bill will encourage retail banks such as JPMorgan and Citibank to issue stablecoins, bringing hundreds of millions of potential user entry points to the crypto market and fundamentally changing the political attitude of the United States towards the crypto industry.

The Double-Edged Sword of Legislation: The Paradox of Stablecoin Expansion and Yield Restrictions The officially signed and effective "GENIUS Act" is rapidly promoting the global adoption of stablecoins. The United States provides a comprehensive regulatory framework for such digital assets, safeguarding consumer rights and financial stability, which will undoubtedly accelerate its adoption. However, a key restriction in the act—prohibiting stablecoin issuers (even if their reserve assets generate Interest) from paying returns to holders—is creating a new growth path within the crypto ecosystem.

Yield Demand Overflow: DeFi Becomes a New Destination for Institutional Funds The ban poses a significant challenge to institutions and mature investors relying on yield-generating asset allocation. Bound by fiduciary duties, these fund managers must seek returns for their capital. Julio Moreno, head of research at CryptoQuant, pointed out to BeInCrypto:

"Current mainstream stablecoins like USDT and USDC have never directly paid interest to holders, so the bill has no substantive impact on them. However, new entrants will be prohibited from such operations." Sentora Research Director Juan Pellicer added: "This may guide investors' capital towards decentralized platforms, seeking more transparent and potentially higher return opportunities, such as lending protocols, liquidity pools, and tokenized real-world assets (RWA). Coupled with clearer regulatory guidance, DeFi may become the preferred destination for yield-seeking capital."

Market Shift: The Rise of Staking Stablecoins and Tokenized Funds The market has shown this trend:

1. Surge in Demand for DeFi Stablecoins: Investors are increasingly favoring versions like Aave's aUSDT and Ethena's sUSDe, generating returns through staking or lending in decentralized protocols.
2. Tokenized Money Market Funds (MMF) Explode: Tokenized MMFs launched by giants like BlackRock and Franklin Templeton have become an important channel for stablecoin holders to earn interest. Moreno revealed that the total market value of such products has surpassed $10 billion. The "GENIUS Act" has not eliminated the demand for stable asset returns, but instead redirected it from stablecoins themselves to other crypto products, while bringing the concept of "Real Yield" to the forefront of institutional perspectives.

The Institutional Appeal of DeFi: Real Returns and Transparency Advantages In the post-GENIUS era shaped by the legislation, DeFi platforms attract institutional investors with their unique advantages:

• Programmable Yield（可编程收益）
• Global Liquidity
• Entry to Innovative Financial Tools
• Transparent Smart Contract Basics Pellicer emphasized:

"The bill lays the foundation for regulatory clarity, and institutions are being attracted by the yield potential of DeFi, provided that it is accompanied by strong risk management tools, on-chain audits, and compliance custody solutions." Institutions are particularly focused on "real yield" opportunities—those derived from actual economic activities (such as decentralized exchange trading fees and excess collateralized lending interest), rather than token incentives. Pellicer believes that: "Such models provide more sustainable returns and clearer risk profiles, aligning better with institutional risk control frameworks."

Traditional Finance Enters the Game: Competition or Coexistence? Centrifuge legal advisor Eli Cohen presents a different perspective:

"The bill only prohibits stablecoin issuers from providing returns, but banks, brokers, and other entities can still operate. The GENIUS bill will expand rather than restrict opportunities for stablecoins." He questions whether permissionless DeFi platforms can become the main battlefield for institutional funds: "Traditional financial institutions (TradFi) will create regulated mirror platforms, competing with DeFi lending protocols like Aave and capturing market share." Banking as an Entry: Opening the Era of Hundreds of Millions of Users The most significant indirect benefit of the bill for DeFi lies in the expansion of the user base. Cohen explains: "U.S. retail banks such as JPMorgan and Citibank will issue stablecoins and incentivize holders to use them. The large group of retail bank account holders in the U.S. entering the crypto market is already a milestone." This trend will also bring political dividends: "Once major U.S. financial institutions deeply participate in the crypto market as stablecoin issuers, they will be committed to promoting market development, making it difficult for future governments to revert to the hostile stance of the Biden/Gensler era."

Conclusion: Diverse Paths under Deterministic Growth Although experts have different insights on the growth mechanism, there is a clear consensus: the "GENIUS Act" will drive significant expansion of the crypto ecosystem. Whether through:

1. Institutions chase DeFi "real yield"
2. A new type of bridge emerges between traditional finance and Decentralized Finance
3. Bank stablecoins introduce a large number of new users The future of DeFi and the entire crypto industry is destined to welcome a wave of substantial growth that may exceed expectations. The restrictive provisions of the bill unexpectedly paved the way for the acceleration of Decentralized Finance.