Original Title: "Cobo Stablecoin Weekly Report 19 | After the Stablecoin Bill Takes Effect, Where is the Next 'Battlefield'?"
Welcome to the 19th issue of the "Stablecoin Weekly Report."
Since the enactment of the "GENIUS Act," the market response has been unexpected:
The supply of USDT has surged by billions of dollars against the trend, while the supply of compliance-focused USDC has struggled to grow in the short term.
In the context of the "stablecoin interest ban," yield-bearing stablecoins have rapidly expanded by exploiting regulatory loopholes: the supply of USDe has skyrocketed, Coinbase and PayPal have packaged yields as "rewards," and Coinbase has even launched an "embedded rewards SDK." Anchorage and Ethena Labs are building institutional-grade compliant yield channels based on tokenized assets like BlackRock's BUIDL.
Privacy has become a new focus: ZKP and DID can provide solutions for institutional payments that "verify compliance without disclosing information," alleviating privacy concerns for enterprises venturing into stablecoins.
Market Overview and Growth Highlights
The total market capitalization of stablecoins has reached $269.696 billion, with a week-on-week increase of $2.606 billion. In terms of market structure, USDT continues to dominate with a share of 61.25%; USDC ranks second with a market cap of $64.502 billion, accounting for 23.92%.
Blockchain Network Distribution
Top Three Networks by Stablecoin Market Cap:
Ethereum: $135.786 billion
Tron: $82.995 billion
Solana: $11.431 billion
Top 3 Networks with the Fastest Weekly Growth:
Berachain: +96.57% (USDT share 43.15%)
XRPL: +49.84% (RLUSD share 49.11%)
Sei: +47.95% (USDC share 85.96%)
Data from DefiLlama
U.S. Bank Secrecy Act and Privacy Requirements for Stablecoin Payments
After the U.S. stablecoin bill took effect, privacy has become the next focus for regulators and the market.
As the market cap of stablecoins breaks through $270 billion and quickly enters mainstream payment systems, the "complete transparency" on-chain has begun to expose new issues. Since every transaction on a public chain is permanently visible, it effectively makes a company's entire financial history, supply chain information, and compensation structure public. For retail investors, this may just be a nuisance, but for businesses and institutions, it is an unacceptable hard threshold. This means that competitors can track every payment in real-time, and if this issue is not resolved, the penetration of stablecoins in commercial payments and institutional settlements will be severely limited.
If privacy becomes a concern, the penetration of stablecoins in commercial payments and institutional settlements will be hindered. Coinbase's Chief Legal Officer Paul Grewal recently pointed out that legislation like the "GENIUS Act" must simultaneously upgrade the Bank Secrecy Act to be effective. The current model is inefficient and centralizes sensitive data storage, creating a "honey pot" that hackers covet, and is not ideal for anti-money laundering efforts.
Grewal emphasized that privacy and security are not a zero-sum game. Technologies like Zero-Knowledge Proofs (ZKP) and Decentralized Identities (DID) can achieve "compliance verification without exposing raw information," allowing institutions to see only the verification results rather than all data, thus balancing data minimization and precise regulation. He called for the U.S. Treasury to lead the establishment of a public-private collaboration mechanism, prioritizing the transformation of compliance processes that can quickly adapt to ZKP, focusing monitoring on key data points of suspicious transactions, and enhancing screening efficiency with AI risk control models. This approach can protect privacy without compromising regulatory accuracy and clear the biggest obstacle to the institutionalization of stablecoins, giving the U.S. an advantage in the institutionalization and internationalization of digital assets.
Stablecoin "Reward Economics" Under U.S. Interest Ban
Regulatory restrictions often spur unexpected innovations. For example, the "GENIUS Act" prohibits stablecoin issuers from paying interest to users, originally intended to curb high-risk behavior, but unexpectedly led to explosive growth in yield-bearing stablecoins. Since the bill's passage, the supply of products like Ethena's USDe has increased by billions of dollars, with their yield mechanisms relying on exchange funding rates rather than government bonds, successfully circumventing legal restrictions.
In a regulatory vacuum, Coinbase and PayPal have restructured stablecoin returns as "rewards," avoiding the restrictions in the regulations that apply only to issuers. As a distributor of USDC, Coinbase returns Circle's earnings to users; PayPal, through Paxos, isolates issuer risk and continues to offer a 4.5% annualized return. Anchorage and Ethena Labs have even linked stablecoin yields to tokenized assets like BlackRock's BUIDL, creating institutional-grade compliant yield channels.
Paying interest to holders has become a key means for mature and emerging markets to attract funds. Coinbase has even API-ified "interest rewards" through an embedded wallet SDK, lowering the barrier for developers to integrate annual yield features; in high-inflation markets like Latin America, Slash's USDSL offers a 4.5% annualized reward, quickly attracting capital inflows by combining the anti-depreciation of dollar assets. Stablecoins are efficiently transmitting underlying asset returns through more complex and compliant financial engineering, reshaping user relationships and value distribution patterns.
Key Words for the Implementation of Hong Kong's Stablecoin Regulation—Transparency and Full-Chain Supervision
Hong Kong's "Stablecoin Regulation" has officially taken effect, sparking widespread discussion in the market about mandatory KYC, overseas stablecoin policies, and DeFi compatibility. In fact, the core of this regulation is not "comprehensive prohibition," but rather controlling stablecoins "issued in Hong Kong" or "denominated in Hong Kong dollars," particularly targeting tokenized assets related to the Renminbi. The circulation of overseas stablecoins like USDT and USDC in the secondary market is not directly restricted by this. Hong Kong's strategy is clear: control the source of issuance, focus high-value scenarios with high regulatory thresholds, such as Renminbi asset tokenization and offshore Renminbi stablecoins, creating a "quasi-sovereign settlement tool" that differentiates itself from the U.S. market-driven model and the EU's unified standards.
The key words of this regulation are transparency and full-chain supervision. From issuance, custody, clearing to distribution, strict standards are set for the entire lifecycle, with very high licensing thresholds. Downstream custody, distribution, and clearing processes must also meet compliance requirements. Banks, payment institutions, and on-chain infrastructure providers will be included in a unified framework, shifting the distribution ecosystem from "open access" to "permitted access." In this structure, infrastructure providers that master MPC wallets, on-chain compliance, and fund risk control capabilities will become core partners for banks and tech giants.
The strict regulations also bring new challenges to the industry. It means that issuers must bear ultimate compliance responsibility for the downstream ecosystem (including custody, distribution, clearing, and other third parties). Any participant wishing to enter this ecosystem must meet both technical and institutional compliance. This forces the industry towards specialization and presents significant opportunities for infrastructure providers. For example, technical infrastructure providers need to offer multi-signature, MPC, HSM, and other decentralized mechanisms, as well as MPC wallet technology, to help issuers elevate private key security to a cornerstone of trust, balancing asset sovereignty and legal liability traceability. This technical solution upgrades wallets from a simple backend tool to an entry point of a compliant security system.
Market Adoption
JPMorgan: DeFi and Asset Tokenization Growth "Still Disappointing"
Key Points:
The total value locked (TVL) in DeFi has not yet recovered to the 2021 peak, with the main participants still being retail investors and crypto-native enterprises, while traditional institutions are almost absent.
The global scale of tokenized assets is only about $25 billion, described by analysts as "quite insignificant," with over 60 issued tokenized bonds totaling $8 billion, and secondary market trading is almost zero.
Institutional adoption faces three major obstacles: lack of coordinated cross-border regulation, legal ambiguity regarding on-chain investments, and lack of guarantees for smart contract execution and protocol security.
Why It Matters:
- This report reveals a disconnect between the practical applications of DeFi and tokenization and the market's promotional narratives. Despite the continuous improvement of infrastructure and the emergence of KYC-compliant vaults and licensed lending pools, traditional financial institutions remain cautious. The report points out that the traditional financial system is evolving towards faster and lower-cost settlement and payment driven by fintech, which may undermine the necessity of blockchain systems, indicating that the crypto industry needs to develop more compelling institutional-grade application scenarios.
Remitly Adopts Stablecoin Technology to Optimize Cross-Border Payment Business, Launching Multi-Currency Digital Wallet Service
Key Points:
Remitly will launch a multi-currency "Remitly Wallet" in September, supporting the storage of fiat and stablecoins, particularly targeting users in countries with high inflation or currency volatility.
The company is collaborating with Stripe's Bridge to provide stablecoin payment options for users in over 170 countries, expanding its existing fiat payment network.
Remitly has integrated USD stablecoins like USDC into its internal financial operations, enabling round-the-clock fund flow, reducing pre-funding requirements, and improving capital efficiency.
Why It Matters:
- This marks a significant move by mainstream cross-border payment companies to adopt stablecoin technology on a large scale. By integrating stablecoins into its core business, Remitly not only provides a value preservation solution for users in high-inflation areas but also addresses the liquidity challenges faced by traditional remittance systems. This innovative model will accelerate the application of stablecoins in real payment scenarios, providing more efficient and cost-effective solutions for hundreds of millions globally who rely on cross-border financial services, especially in markets with limited financial infrastructure.
Tether CEO: 40% of Blockchain Fees Come from USDT Transfers
Key Points:
Tether CEO Paolo Ardoino tweeted that 40% of the blockchain fees across the network are used for USDT transfers, a figure that encompasses nine major public chains.
Hundreds of millions of users in emerging markets use USDT daily to hedge against their local currency depreciation and inflation risks, making it one of the most active blockchain applications globally.
In the crypto context, "transactions" typically refer to activities such as buying, selling, swapping, and arbitraging on exchanges. These activities usually occur within the internal systems or liquidity pools of exchanges, not requiring independent on-chain transfer fees each time. When a USDT transfer occurs on-chain and incurs a fee, it usually means that funds are being transferred between different addresses or wallets. Such scenarios can be classified as "actual use" rather than mere speculation.
Why It Matters:
- This data highlights that USDT has become the dominant application in the blockchain ecosystem, far surpassing other use cases. Paolo predicts that the future competitive landscape of blockchain will revolve around gas fee optimization and USDT transaction fee payments, reflecting that stablecoins have evolved from mere transactional mediums to key solutions for real-world financial needs, especially in economically unstable regions. This phenomenon also proves that blockchain technology is playing a substantial role in financial inclusion.
Macroeconomic Trends
Mizuho: Coinbase Q2 Financial Report Shows Circle USDC Profit Margins Shrinking
Key Points:
Mizuho analysts estimate that Circle earned approximately $625 million in interest income from USDC reserves in the second quarter, of which $332.5 million was paid to Coinbase.
With new distribution partners like Binance joining, analysts believe Circle's net reserve income rate will face greater pressure, as distribution costs remain structurally high and continue to grow.
Following the passage of the GENIUS Act, JPMorgan and Bank of America are set to launch their own stablecoins, intensifying competition in the U.S. dollar stablecoin market.
Why It Matters:
Despite Circle's strong IPO performance, Mizuho maintains a "underperform" rating and an $85 price target, believing the market underestimates the risks facing USDC. As Circle expands its distribution network, the previously exclusive stablecoin profit-sharing model enjoyed by Coinbase is being disrupted, which could weaken Circle's profitability. With expectations of interest rate cuts and the entry of traditional banks, USDC's competitive advantage is being challenged, which could have profound implications for the overall stablecoin market landscape.
U.S. Treasury Expands Short-Term Debt Issuance to Record Levels, Stablecoins Become New Buyers
Key Points:
The U.S. Treasury will auction $100 billion in four-week Treasury bills, a historic high, increasing by $5 billion from the previous auction while maintaining the size of eight-week and seventeen-week Treasury bills.
Short-term Treasury yields exceeding 4% have attracted a large number of investors, with $16.7 billion flowing into short-term Treasury ETFs in the second quarter, doubling year-on-year.
The Treasury Borrowing Advisory Committee noted that "the increase in stablecoin issuance" has become a new source of demand for Treasury securities, as the GENIUS Act requires stablecoin issuers to hold safe assets like Treasury securities.
Why It Matters:
The Trump administration has clearly favored a short-term financing strategy, with Treasury Secretary Mnuchin believing that the cost of issuing long-term debt is too high in the current interest rate environment. The demand for stablecoins has become an important variable in the Treasury bill market, and regulatory requirements for stablecoin issuers to hold safe assets are creating new structural buying pressure. Meanwhile, global central banks are reducing their allocations to U.S. dollar assets in favor of gold, with Bank of America predicting gold prices could exceed $4,000, reflecting growing market concerns about the sustainability of U.S. debt.
Surge in Supply of Yield-Bearing Stablecoins Since the Passage of the GENIUS Act
Key Points:
Since the signing of the GENIUS Act on July 18, the supply of revenue-generating stablecoin Ethena's USDe has increased by 70% to $9.49 billion, making it the third-largest stablecoin by market cap.
Sky's USDS supply has also grown by 23% to $4.81 billion during the same period, ranking fourth in market cap, with these stablecoins providing yields to holders through staking mechanisms.
The current annualized staking yield for USDe is 10.86%, while USDS is at 4.75%. Considering the U.S. inflation rate of 2.7% in June, the real yields are 8.16% and 2.05%, respectively.
Why It Matters:
The GENIUS Act prohibits stablecoin issuers from directly providing yields to holders, unexpectedly spurring explosive growth in stakeable stablecoins. Investors are turning to stablecoins that offer yields through protocol-native staking mechanisms to circumvent regulatory restrictions. The overall stablecoin market has grown from $205 billion to $268 billion this year, with analysts predicting it could approach $300 billion by year-end. This phenomenon shows that despite tightening regulations, the market's demand for high-yield dollar alternatives remains strong, driving a new wave of innovation and adoption in DeFi applications.
New Product Launches
Former Apple Engineer Launches Privacy-Protecting Crypto Visa Card Payy
Key Points:
The Payy Visa card enables privacy payments through zero-knowledge proofs (ZKP) and a self-built blockchain, ensuring that users' stablecoin transaction amounts are not publicly visible on-chain.
The card was developed by Polybase Labs, founded by former Apple iOS engineer Sid Gandhi, over a three-year period, ensuring both transaction privacy and compliance.
Payy is designed for everyday users, emphasizing a simple onboarding experience and user-friendliness, allowing users to self-custody stablecoin storage and usage without needing to understand blockchain.
Why It Matters:
Payy addresses a critical pain point in the crypto payment space—transaction privacy and usability. Traditional blockchain payment solutions expose user transaction records on public chains, while Payy achieves transaction privacy protection while maintaining regulatory compliance. This represents an important step towards mainstream adoption of crypto payments, providing a viable daily payment solution for self-custodied stablecoins and potentially becoming a true alternative to traditional banking systems.
MetaMask May Collaborate with Stripe to Launch Stablecoin mmUSD
Key Points:
A mistakenly released Aave governance proposal revealed that MetaMask is working with payment giant Stripe to launch the dollar stablecoin mmUSD, with the M^0 platform also involved in support.
The proposal indicates that mmUSD will become a "cornerstone asset" in the MetaMask ecosystem, natively integrated into all its services, including wallets, trading, buying, selling, and earning.
The proposal was quickly deleted, with Aave Chan Initiative founder Marc Zeller stating that the timing of the announcement was "premature," but confirming the authenticity of the proposal's content.
Why It Matters:
This marks another tech giant entering the stablecoin market after PayPal and Robinhood. As one of the largest crypto wallets, MetaMask's collaboration with top payment processor Stripe to launch a stablecoin could accelerate the integration of stablecoins in both Web3 and traditional payment sectors.
Coinbase Launches Embedded Wallet Toolkit to Simplify Developer Onboarding for Web3 Users
Key Points:
Coinbase has added the Embedded Wallets SDK tool to its Developer Platform (CDP), allowing developers to seamlessly integrate self-custody wallet features into their applications.
The SDK includes built-in features such as cryptocurrency deposit channels, token swaps, and a 4.1% annualized yield on USDC, aimed at eliminating the trade-off between user experience and self-custody risks.
Unlike traditional wallets, users can log in directly using email, SMS, or OAuth without needing a browser extension or remembering seed phrases, greatly simplifying the onboarding experience.
Why It Matters:
This move reflects Coinbase's strategic positioning in Web3 infrastructure, promoting large-scale adoption by lowering development barriers. The new tools operate on the same system that supports Coinbase DEX, providing enterprise-level security while addressing one of the biggest pain points in the crypto space: the complex user onboarding process. This aligns with Coinbase's overall strategy to reshape wallets into super applications, further solidifying its role as a bridge between crypto and traditional internet.
U.S. Digital Bank Slash Launches Stablecoin USDSL Issued by Stripe Bridge, Supporting Non-U.S. Businesses in Easy USD and Stablecoin Transactions
Key Points:
San Francisco digital bank Slash has launched the dollar stablecoin USDSL issued by Stripe's Bridge platform.
This stablecoin aims to provide businesses with the ability to make dollar payments globally without needing a U.S. bank account, reducing settlement times and foreign exchange costs.
This move comes as the GENIUS Act is signed into law, providing a regulatory framework for the U.S. stablecoin industry and issuers.
Why It Matters:
As the regulatory framework for stablecoins becomes clearer, fintech companies are accelerating their entry into this space. Slash's issuance of stablecoins using Stripe's Bridge platform represents a new trend of merging traditional finance with crypto technology, potentially addressing efficiency and cost issues in cross-border payments. This also indicates that with a clearer regulatory environment, the application of stablecoins in commercial payments is moving from concept to practice.
Trump-Linked Project World Liberty Launches USD1 Stablecoin Loyalty Program
Key Points:
The DeFi project World Liberty Financial, supported by the Trump family, announced the launch of the USD1 points program, similar to an airline mileage model, initially collaborating with exchanges like Gate.
Users can earn points by trading USD1 pairs, holding USD1 balances, staking USD1 for yields, using it in approved DeFi protocols, and interacting with the WLFI mobile app.
The USD1 stablecoin launched by World Liberty Financial in April claims to be fully backed by short-term U.S. Treasury securities, dollar deposits, and other cash equivalents, issued by BitGo Trust Company.
Why It Matters:
Trump and his three sons all serve as ambassadors or advocates for World Liberty Financial, raising concerns about potential conflicts of interest due to these political and business connections. The USD1 points program combines stablecoins with loyalty rewards, representing a new direction for stablecoin projects seeking user stickiness in an increasingly competitive environment, and reflecting a trend of closer interaction between government and the crypto industry.
JPMorgan Launches On-Chain Intraday Repo Solution Based on Kinexys Blockchain
Key Points:
JPMorgan, in collaboration with HQLA-X and Ownera, has launched a "cross-digital ledger solution" that allows repo traders to exchange funds and securities using blockchain deposit accounts on the Kinexys network.
This tool supports the full lifecycle management of repo transactions, from execution to collateral management to settlement, and can specify settlement and maturity times down to the minute.
The first phase of the solution can handle daily trading volumes of up to $1 billion, designed as an industry-grade platform that supports future expansion to multiple trading venues, collateral sources, and digital cash tools.
Why It Matters:
- JPMorgan is leading blockchain innovation in traditional banking, with Kinexys (formerly Onyx) becoming the core of the bank's digital asset strategy. The platform is expected to support various digital assets, including deposit tokens, stablecoins, and central bank digital currencies, reducing market fragmentation. With JPMorgan launching a stablecoin-like asset, JPMD, and establishing a partnership with Coinbase, this move signifies Wall Street's recognition of blockchain technology transitioning from experimental phases to practical applications, setting new standards for institutional-grade digital asset infrastructure.
Regulatory Compliance
Paxos Fined $48.5 Million by New York Regulators Due to Binance BUSD Partnership
Key Points:
Paxos Trust Company will pay a $26.5 million fine to the New York State Department of Financial Services (NYDFS) and invest an additional $22 million to improve compliance programs.
Regulators found that Paxos did not conduct adequate due diligence on its partnership with Binance when issuing the BUSD stablecoin in 2018, and there were deficiencies in its anti-money laundering procedures.
Paxos accepted Binance's claim that it had "fully restricted U.S. users" without conducting independent verification, and the NYDFS ordered Paxos to stop minting BUSD in 2023.
Why It Matters:
- This penalty demonstrates regulators' strict scrutiny of stablecoin issuers' partnerships, especially with offshore exchanges. Although Paxos stated that these issues were identified and fully resolved two and a half years ago, this case serves as a wake-up call for the entire stablecoin industry, reminding issuers of the necessity for rigorous due diligence on partners and the establishment of robust compliance frameworks. With the implementation of the GENIUS Act and the expansion of the stablecoin market, regulatory scrutiny of stablecoin issuers will become more stringent, potentially exposing those partnering with problematic exchanges to greater legal risks.
Trump Signs Executive Order to Stop "Unfair Practices" Against Cryptocurrency Firms by Banks
Key Points:
President Trump signed an executive order prohibiting federal regulators from imposing additional oversight on banks serving cryptocurrency firms based on "reputational risk."
The order aims to end "Operation Choke Point 2.0," preventing banks from refusing to provide services to crypto companies for political reasons or subjective concerns about high-risk industries.
The Federal Reserve, OCC, and FDIC have committed to no longer considering "reputational risk" factors when assessing bank customer relationships, with support from House Financial Services Committee Chair Hill and Senator Lummis.
Why It Matters:
- This executive order fundamentally removes the subjective tools used by regulators, forcing banks to make decisions based on actual legal and financial risks rather than vague reputational considerations. It clearly establishes the legitimate status of the crypto industry, ensuring equal access to banking services for it, just like other industries. In the context of the government actively adjusting the regulatory framework, this move will reshape the relationship between banks and crypto companies, promoting deeper integration between traditional finance and the digital asset industry.
Capital Layout
Tether Acquires Stake in MiCA Licensed Exchange Bit2Me, Leading $32.7 Million Financing
Key Points:
Stablecoin issuer Tether has acquired a minority stake in the Spanish crypto exchange Bit2Me and led a €30 million ($32.7 million) financing round, with the transaction expected to close in the coming weeks.
Bit2Me is the first Spanish-language exchange to receive a MiCA framework license from the EU, allowing it to provide services in 27 EU member states with its Crypto Asset Service Provider (CASP) license.
This investment will fund Bit2Me's expansion in the EU and Latin America (initially Argentina), with the exchange having been established in 2014 and currently serving 1.2 million users.
Why It Matters:
- This is a strategic move by Tether to re-establish its position in the European market following the tightening of MiCA regulations. As several exchanges have delisted or deprioritized USDT over the past year, Tether is creating compliant market channels for its stablecoin by investing in licensed exchanges. This move demonstrates how Tether is leveraging its substantial profits (a record $4.9 billion last quarter) for strategic investments, expanding its business in various regulatory environments globally.
Ripple to Spend $200 Million to Acquire Stablecoin Payment Platform Rail
Key Points:
Ripple has announced the acquisition of the stablecoin payment platform Rail for $200 million, with the deal expected to close in Q4 2025.
Rail is projected to handle over 10% of global stablecoin payments in 2025, with a global market size of approximately $36 billion.
This acquisition will enable Ripple to offer enterprise-grade stablecoin payment solutions, supporting various digital asset payments such as RLUSD and XRP, allowing customers to use deposit and withdrawal services without holding cryptocurrencies.
Why It Matters:
- This is Ripple's second significant investment following its $1.25 billion acquisition of crypto-friendly brokerage Hidden Road in April this year, marking the company's acceleration into the stablecoin market. As Ripple actively applies for MiCA licenses in the EU and gains regulatory approval for RLUSD in the Dubai International Financial Centre, the company is expanding its stablecoin business globally. This move will transform Ripple from a major cross-border payment solution provider into a comprehensive financial services platform, reflecting the intensifying competition in the institutional-grade stablecoin service market.
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