What Is USDC? What Impact Does the U.S. Genesis Act Have?

USD Coin (USDC) is a stablecoin pegged 1:1 to the US dollar, launched by Circle in 2018, aiming to provide the crypto market with a payment tool that combines stability and the advantages of blockchain technology. Its core features include:

1. Stability of value: Each USDC is backed by 1 USD reserve, supported by cash and short-term US treasuries, and audited monthly by an independent institution to ensure transparency.

2. Compliance: USDC issuer Circle is registered with the U.S. Department of the Treasury as a Money Services Business (MSB) and holds money transmission licenses in multiple states, strictly adhering to Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.

3. Use cases: widely used in cross-border payments, DeFi lending, trading media and other fields, by 2025 USDC’s market share in DeFi has reached 30%.

Compared to USDT, USDC is known for higher transparency and regulatory compliance, with 80% of its reserves in US Treasury bonds and 20% in cash, and audit reports are publicly available. USDT, on the other hand, faces long-term regulatory pressure due to transparency controversies over reserves.

The U.S. ‘GENIUS Act’: Reshaping the rules of the stablecoin market

In May 2025, the United States Senate passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), marking a new phase in stablecoin regulation. The core content of the act includes:

1. Strict reserve requirements: stablecoins must be 100% backed by cash, treasury bonds, and other highly liquid assets, and rehypothecation or misappropriation of reserves is prohibited.
2. Tiered regulatory mechanism: Issuers with a market value exceeding 100 billion US dollars (such as USDC, USDT) must be subject to federal direct supervision, while smaller institutions are regulated at the state level.
3. Transparency and Compliance: Mandatory monthly disclosure of reserve composition, and introduction of third-party audits; prohibition of interest-bearing stablecoins, and restriction of algorithmic stablecoins.
4. Strengthening the position of the US dollar: the bill explicitly supports USD stablecoins to compete with digital RMB and the EU’s MiCA regulations.

The direct impact of the bill on USDC:

• Compliance advantages highlighted: USDC’s reserve structure already complies with legal requirements, and may become the preferred stablecoin for institutions, further expanding market share.
• Intensified market competition: Legislation restricts large tech companies (such as Meta, Amazon) from issuing stablecoins, while increasing compliance costs for foreign issuers (such as Tether), creating expansion space for USDC.
• Increased innovation pressure: decentralized stablecoins (such as DAI) need to adjust their reserve models, shifting towards more US Treasury support, while USDC is more adaptable to new regulations due to its centralized nature.

Opportunities and Challenges: The Future Prospects of USDC

Opportunity:

1. Institutional funds entering: The bill clears obstacles for traditional financial institutions to participate in the stablecoin market, and USDC may become the preferred partner for banks and brokerages.
2. Global payment scenarios expansion: Compliance will drive the application of USDC in cross-border payments, supply chain finance, and other areas, for example, JPMorgan has explored the use cases of USDC in blockchain settlement.
3. DeFi ecosystem growth: The increase in stablecoin trading volume will benefit DeFi protocols such as Curve, Aave, indirectly enhancing the on-chain demand for USDC.

Challenge:

1. Rising compliance costs: Monthly audits and information disclosure may increase operating costs, leading to the elimination of small issuers, but USDC can absorb the pressure with economies of scale.
2. User redemption right dispute: Although the law requires priority protection of redemption rights, the USDC terms stipulate that individual users must redeem indirectly through the exchange, posing legal inequality risks.
3. Regulatory Uncertainty: The bill still needs to pass the Senate for a final vote, and conflicts of interest (such as Trump-related projects USD1) may affect the enforcement strength.

Conclusion: The new landscape of stablecoins in the wave of compliance

The passage of the ‘GENIUS Act’ marks the normalization of stablecoins from ‘wild growth.’ For USDC, compliance and transparency are both moats and drivers of continued growth. With further integration of traditional finance and the crypto ecosystem, USDC is expected to play a more critical role in scenarios such as payments, cross-border settlements, DeFi, etc. However, regulatory dynamics and market competition remain uncertain factors, and investors need to pay attention to the specific implementation and industry feedback after the enactment of the act.