Yield-Bearing Stablecoins Surge Following GENIUS Act Ban

The supply of yield-bearing stablecoins has skyrocketed since the GENIUS Act was signed into law on July 18, despite the bill explicitly prohibiting issuers from offering yields on stablecoins within the United States.

USDe and USDS See Explosive Growth

The biggest beneficiaries of this trend have been Ethena’s USDe and Sky’s USDS, two yield-bearing stablecoins that allow holders to earn returns by staking tokens within their respective ecosystems.

• USDe’s circulating supply has jumped 70%, reaching 9.49 billion, making it the third-largest stablecoin by market capitalization.

• USDS supply rose by 23%, totaling 4.81 billion, placing it fourth overall, according to data from DefiLlama.

The sharp rise in USDe’s supply has also driven up the price of ENA, Ethena’s governance token, which has rallied nearly 60% since mid-July. It currently trades around $0.58, based on CoinGecko data.

Paradoxical Effect of the GENIUS Act

The GENIUS Act, which aimed to regulate stablecoins by banning direct yield offerings, has seemingly triggered more interest in yield-bearing alternatives.

“Surprising winners in a post-GENIUS era — yield-bearing stablecoin supply up a TON despite GENIUS disallowing them in the US,” said Anthony Yim, co-founder of analytics firm Artemis, in a post on X.

Surprising winners in a post-GENIUS era – yield bearing stablecoin supply up a TON despite GENIUS disallowing them in the US@ethena_labs‘s USDe alone added 2.7B in supply since GENIUS (Jul 18) pic.twitter.com/vDfBKe4fk3

— Anthony Yim (@anthonyyim) August 4, 2025

Julio Moreno, Head of Research at CryptoQuant, told Cointelegraph that the GENIUS Act inadvertently pushed investors toward protocols that offer yield via staking, rather than through issuer-based distributions.

“Because the GENIUS Act banned issuers from providing yield directly, investors are turning to yield-bearing stablecoins or staked stablecoins to get returns,” Moreno explained.

Stablecoin Market Growth Could Reach $300B

The total stablecoin market has grown from $205 billion at the start of 2025 to $268 billion, a 23.5% increase year-to-date. If the trend continues, the market could reach $300 billion by year-end, Moreno suggested.

However, Temujin Louie, CEO of Wanchain, warned that tokenization by traditional finance institutions may challenge the future growth of stablecoins:

“Tokenization enables money market funds to adopt the speed and flexibility that previously made stablecoins unique, but with added regulatory oversight and safety,” he said.

A July report also indicated that the GENIUS Act may boost demand for DeFi applications, as users seek yield-generating alternatives beyond stablecoins.

Real Yields Outpace Inflation

Yield-bearing stablecoins typically generate income through staking, lending, or exposure to real-world assets like U.S. Treasuries. This allows users to earn a real rate of return — returns adjusted for inflation.

As of June, U.S. inflation stood at 2.7%. In comparison:

• sUSDe (staked USDe) offers an APY of 10.86%, translating to a real return of 8.16%.

• sUSDS (staked USDS) yields 4.75%, with a real return of 2.05%.

These attractive yields are helping drive demand for staked stablecoins, making them unexpected winners in the wake of the GENIUS Act’s passage.