Experts predict that Ethereum will be the big gainer in the new stablecoin economy.

September 3, 2025 19:21

The GENIUS Act is expected to drive the global use of stablecoins to new heights. With an already established market dominance, Ethereum is poised to disproportionately benefit from this transition.

In a conversation, Sanjay Shah, a researcher at the venture capital firm Electric Capital, emphasized that the Ethereum blockchain has unique architectural advantages that will reinforce the network's role as a fundamental layer for the impending stablecoin economy.

Market Dominance of Ethereum

When U.S. President Donald Trump enacted the GENIUS Act last month, it triggered a significant price rally across the cryptocurrency market.

However, Ethereum's performance was unmatched. It experienced the most positive and sustained effect, surpassing any competitor in the immediate period.

In the days leading up to the passage of the bill, the price of Ethereum skyrocketed, rising more than 20% and surpassing the $3,500 mark. The momentum continued even after the signing of the law, with the network's value reaching a peak of $3,875 the following week.

At the time of writing this article, its price is $4,465.

This powerful effect on the market reinforced investors' confidence in Ethereum's ability to capitalize on a new regulatory environment.

The GENIUS Act has effectively removed the main obstacles, paving the way for broader adoption of stablecoins and easier global access to the US dollar, and investors are betting on Ethereum to lead the way.

Will the GENIUS Law turn Ethereum into a financial anchor?

Stablecoins are intended to become a central component of the global financial system, serving as a conventional dollar channel for various transactions, from savings and payroll to cross-border payments.

The regulatory clarity provided by the GENIUS Act is key to unlocking this widespread adoption, allowing regulated institutions to issue and use stablecoins with confidence.

According to Shah, this transition will establish a new open financial infrastructure, with Ethereum acting as the anchor.

“The regulated issuance will unlock distribution through banks and fintechs. Ethereum could anchor the open and global side of that system, with L2s handling high-performance activity and L1 providing security and finality. The ETH asset can serve as the neutral and productive reserve collateral that underpins loans and other services throughout the financial structure,” stated Gate.

Since Ethereum already hosts most of the stablecoin liquidity, it will capture the majority of this increased activity.

Why Ethereum is Positioned to Lead

The existing dominance of Ethereum is based on three key properties crucial for global institutional adoption: global accessibility, security for institutions, and resistance to government interference.

The focus of legislation on compliance and security reinforces these qualities, attracting more participants into the orbit of the network. As it stands, Ethereum already dominates the market.

According to recent data, Ethereum accounts for more than 52% of the market capitalization of stablecoins worth $278 billion.

Currently, Ethereum dominates more than half of the stablecoin market.

“Ethereum could disproportionately benefit from the GENIUS Act because it already dominates the parts of the crypto economy that the Act is likely to accelerate [como] USD-backed stablecoins and the financial services that grow around them,” Shah said.

He further reinforced this point by saying that growth will naturally gravitate towards the established leader:

“Since Ethereum already hosts the majority of stablecoin issuance and liquidity, much of that growth may flow into its ecosystem, reinforcing the leadership it already has.”

However, the incoming wave of demand for stablecoins will inevitably put greater pressure on networks to process transactions effectively. This reality presents a significant challenge for Ethereum, given its history of scalability issues.

According to Shah, it can easily rise to the occasion.

L2s: Addressing the Scalability Problem

The scalability issues of Ethereum have been a well-known concern in the crypto industry. Its mainnet has traditionally been limited to processing a small number of transactions per second, often leading to network congestion and high transaction fees during periods of high demand.

As the GENIUS Act comes into effect, the anticipated surge in the use of stablecoins will place unprecedented pressure on the network's capacity.

According to public statements by Vitalik Buterin and the Ethereum Foundation, the long-term response of the network to end a history of scalability challenges lies in Layer 2 solutions (L2).

These L2s process the majority of consumer and institutional stablecoin transactions in a highly efficient and low-cost manner. This approach ensures that the network can handle mass adoption without compromising its fundamental principles of decentralization and security.

The Ethereum mainnet (L1) will serve a different but equally critical role as the secure settlement layer, handling the finality of transactions processed on L2.

According to Shah, this synergy is what makes the scaling solution viable.

“Most of the yield from stablecoins for consumers and institutions is designed to exist on Ethereum's L2s, ( such as Base, Optimism, Arbitrum), with L1 acting as the settlement and security layer, so the scale comes from the rollups while preserving Ethereum's trust guarantees,” he said.

It also highlighted the flexibility and benefits that this system offers to institutions:

“The current rollup architecture is built for high-volume, low-cost financial applications and payments, and allows institutions to choose the right commitments (performance, fees, compliance features) without leaving the security umbrella of Ethereum.”

Despite the emergence of competing blockchains, Ethereum's dominance may remain strong in light of this enhanced infrastructure.

What needs to happen to dethrone Ethereum?

While rival blockchains have made inroads into the stablecoin market, it is unlikely that their challenge to Ethereum's dominance will succeed in the long term.

The long-term success of a network in finance depends on its fundamental qualities. Decentralization and security create a virtuous cycle that attracts capital and talent. Ethereum's proven security track record and decentralized nature foster an institutional trust environment, attracting large pools of capital and creating deep liquidity.

This rich ecosystem attracts developers to build financial applications and services on the platform. Shah argues that these core factors make Ethereum's position hard to challenge.

“Speed and cost are also important factors, but without the same options for decentralization, security history, and institutional customization, it can be difficult to displace Ethereum's leadership in finance.”

This reality presents a compelling case for why regulated institutions may feel more inclined to choose Ethereum, even though they may now launch their own private stablecoins.

The path of least friction

Although traditional financial institutions may explore launching their own private blockchains, they may gravitate towards open public networks.

“Some banks will pilot proprietary or permissioned rails, but settlement liquidity tends to coalesce where the counterparties already are. Private networks generally connect back to where liquidity is settled,” Shah told Gate.

Although the GENIUS Act opens new opportunities for institutions, launching and operating a private stablecoin requires a substantial operational commitment.

“The Law lowers the barrier for banks and fintechs to issue, but the path of least friction may still be to issue in, or at least interoperate with, Ethereum's liquidity centers and L2s to access global counterparts and composable finance,” he added.

Based on current trends, all indications suggest that Ethereum will strengthen its position as the leading settlement layer for digital transactions in dollars. The rising price of the asset and increasing institutional interest in the network reinforce such a trajectory.

Disclaimer: For informational purposes only. Past performance is not indicative of future results.