U.S. President Donald Trump (left) signed the GENIUS Act that protects using permissionless blockchains by stablecoin issuers. However the Federal Reserve Chair Jay Powell (proper) has but to rescind a coverage calling Ethereum unsafe and unsound to be used with dollar-backed tokens.
Getty Photos
In July 2025, Congress handed the GENIUS Act with the intention of making certain that stablecoin issuers usually are not denied licenses solely as a result of they suggest utilizing a permissionless, open, and public blockchain — comparable to Ethereum.
On the identical time, the Federal Reserve’s Policy Statement 9(13), issued in January 2023, stays in impact. The coverage advises that state member banks ought to keep away from sure actions involving open blockchains, stating that the issuance of tokens on such networks “is very prone to be inconsistent with protected and sound banking practices.”
This regulatory stress has emerged as main monetary establishments announce new blockchain infrastructure tasks, elevating questions in regards to the future position of public networks like Ethereum in institutional finance.
Present Stablecoin Market Actuality
Ethereum at present dominates the stablecoin market, holding roughly 49-54% of the $271.1 billion world stablecoin provide as of August 2025. USDC processes over $20 billion in every day transfers on Ethereum alone, considerably outpacing different networks. Mixed with TRON’s 35% market share, the 2 networks management practically 84% of all stablecoins.
Whereas TRON has gained floor in USDT transactions—processing over 1 million weekly transactions—Ethereum stays the first community for DeFi-integrated stablecoins and institutional tokenized belongings, together with BlackRock’s $2.3 billion BUIDL treasury fund.
Policy Background
Policy Assertion 9(13) was developed following considerations about anti-money laundering, operational dangers, and cybersecurity vulnerabilities on public blockchains in the course of the Biden Administration. The Federal Reserve coverage states: “Issuance of tokens on open, permissionless blockchains is very prone to be inconsistent with protected and sound banking practices.”
The GENIUS Act takes the alternative method, specifying that “a main Federal cost stablecoin regulator shall solely deny a considerably full utility if the regulator determines that the actions of the applicant could be unsafe or unsound. The issuance of a cost stablecoin on an open, public, or decentralized community shall not be a sound floor for denial of an utility.”
Policymaker Positions
Within the White Home’s July 2025 Digital Belongings Report, President Donald Trump said that “the Federal Reserve should rescind Policy Assertion 9(13) instantly,” including that regulatory prejudice in opposition to permissionless blockchains may harm U.S. competitiveness and “advances solely the pursuits of legacy establishments.”
Throughout a June 2025 Senate Banking Committee listening to, Senator Cynthia Lummis (R‑Wyo.) questioned Federal Reserve Chair Jerome Powell instantly: “Chair Powell, your steering ought to now serve the GENIUS Act, not impede it. Will the Federal Reserve rescind Policy Assertion 9(13) and let American banks lead in permissionless innovation, or will we maintain defending incumbents at the price of progress?”
Powell responded that the Fed welcomes Congressional motion however that its “first duty stays security and soundness.” He stated the central financial institution continues to judge the coverage “in gentle of recent laws” whereas sustaining “applicable warning with respect to permissionless platforms.”
New Blockchain Infrastructure Tasks
Instantly over the past couple of days, there are a minimum of two new blockchains within the ecosystem that seem like permisssioned and designed for stablecoin use in regulatory environments.
Circle’s Arc: On August 12, 2025, Circle announced plans to launch Arc, an EVM-compatible layer-one blockchain designed for regulated stablecoin finance. The community will enter public testnet in fall 2025, with Arc positioned as a compliance-focused platform that may bridge to public networks like Ethereum.
Stripe’s Tempo: Based on Fortune on August 11, 2025, Stripe is constructing a blockchain known as Tempo in partnership with Paradigm, although the corporate has not formally confirmed the venture. The trouble reportedly entails a five-person staff engaged on funds infrastructure.
Regulatory Affect Evaluation
The divergence between Congressional intent and Fed steering creates uncertainty for establishments contemplating stablecoin tasks. Beneath present Policy Assertion 9(13), banks looking for to subject dollar-backed tokens on permissionless networks should exhibit complete compliance with security and soundness necessities—a course of that many discover prohibitively complicated.
Circle’s resolution to construct Arc and the Stripe ‘Tenor’ growth counsel that establishments are choosing permissioned or semi-permissioned approaches that may later bridge to public networks slightly than launching instantly on Ethereum or related platforms.
Market Implications
Regardless of regulatory uncertainty, Ethereum continues to course of nearly all of stablecoin quantity and stays the first platform for institutional DeFi purposes. The community’s dominance in tokenized treasury merchandise—comparable to BlackRock’s BUIDL fund and different real-world asset tokens—signifies that institutional adoption is continuing, albeit by means of structured, compliance-focused automobiles.
The important thing query is whether or not future bank-issued stablecoins will launch instantly on Ethereum beneath revised Fed steering, or whether or not the two-step mannequin of permissioned issuance adopted by public community bridging will turn out to be the usual method for regulated establishments.
Future Outlook and Pathways Ahead
The regulatory course set within the coming months will play a decisive position in shaping how stablecoins work together with open blockchain platforms like Ethereum. Reconciling the GENIUS Act’s mandate for open community entry with the Federal Reserve’s emphasis on security and soundness may result in a balanced framework that fosters each innovation and danger administration.
For establishments, hybrid approaches—combining permissioned infrastructure with the power to bridge to public networks—might supply a sensible path ahead. This mannequin permits issuers to satisfy compliance necessities whereas nonetheless tapping into Ethereum’s scale, liquidity, and interoperability.
Advances in blockchain analytics and regulatory know-how (RegTech) may additionally make it simpler for issuers to fulfill anti-money laundering, cybersecurity, and prudential oversight requirements with out sacrificing the transparency and programmability that public ledgers present. These instruments might assist scale back friction in regulatory approvals, enhance belief, and broaden institutional participation in blockchain-based finance.
If policymakers and regulators can align on a shared imaginative and prescient, the US may set a worldwide benchmark for integrating permissionless blockchain know-how right into a regulated monetary system—doubtlessly reshaping digital asset markets for years to return. The query for now’s whether or not regulatory coverage by the Federal Reserve is doubtlessly selecting winners and losers sooner or later design of blockchain platforms.
