There’s been an unprecedented tailwind in Washington DC this year for stablecoins. From the embrace of the assets by politicians and the industry to the GENIUS stablecoin legislation passing the Senate, 2025 marks an important turning point.
Treasury Secretary Scott Bessent even tasked stablecoins with nothing less important than ensuring the greenback remains the world’s number one currency. “As President Trump has directed, we are going to keep the US the dominant reserve currency in the world, and we will use stablecoins to do that,” he said at the Digital Assets Summit in March.
Which is why it’s almost bizarre to realize that stablecoins are a descendant of Bitcoin — a decentralized currency designed to level the playing field in a world of rigged centralized banking systems and overzealous governments. Stablecoins and Bitcoin would seem to have two irreconcilable aims — the former supports the existing fiat based financial system and the latter wants to overthrow it.
So what happens once the GENIUS Act is enacted? Are we headed for a showdown between stablecoins and Bitcoin?
FalconX Head of Research David Lawant says that’s probably the wrong way to think about it… at least in the short term.
“Rather than competing, the two can complement each other,” Lawant tells Magazine.
“As finance becomes increasingly digital, it makes sense to have both a digital fiat equivalent for transactions and a digital gold equivalent for storing value.”
Bitcoin and stablecoins aren’t going for the same pie
Bitcoin Policy Institute head of policy Zack Shapiro agrees, saying that Bitcoin and stablecoins are “fundamentally different” with non-competing selling points.
“Stablecoins are dollar-denominated assets that live on blockchains, enabling fiat to move more efficiently over the internet, akin to digitized cash that settles quickly and cheaply. They solve inefficiencies in the traditional banking system, where settlement can take days and involve multiple intermediaries,” he explains.
While they share blockchain infrastructure with Bitcoin, this is where the similarities end, he adds.
“Bitcoin is a radically new form of money—decentralized, scarce, censorship-resistant, and governed by code, not policy. It’s better understood as a digital commodity or a monetary asset like gold, whereas stablecoins are simply tokenized representations of fiat currency, functioning more like payment infrastructure than a new asset class.”
Also read: GENIUS Act reopens the door for a Meta stablecoin, but will it work?
Stablecoins might even help Bitcoin
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which establishes a clear legal framework for stablecoins, is making its way through the US Congress and is expected to reach Trump’s desk by August, according to Galaxy Head of Research Alex Thorn.
Following the passage of the GENIUS Act in the US Senate, US President Donald Trump claimed, “This is American Brilliance at its best, and we are going to show the World how to WIN with Digital Assets like never before!”
The bill lays the groundwork for a comprehensive oversight system surrounding stablecoins pegged to the US dollar. A key feature of the legislation is its strict criteria for who can issue these stablecoins: only federally or state-qualified entities, or subsidiaries of insured depository institutions.
It mandates one-to-one reserve backing of stablecoins with US currency or similarly liquid assets, and notably, stablecoins under this bill are excluded from being treated as securities.
“The GENIUS Act is a reasonable, bipartisan bill that reflects a pragmatic step forward in digital asset regulation,” says Shapiro.
“While stablecoins are already legal under existing US law, the bill would enhance consumer protections […] and would provide long-term regulatory clarity for institutions that want to use stablecoins for payments infrastructure.
“It’s especially valuable in reducing regulatory uncertainty for traditional financial players that are currently hesitant to engage.”
However, Shapiro notes the bill won’t have a direct effect on Bitcoin.
“But its passage could bolster the perception, both domestically and internationally, that the US is embracing digital assets in a bipartisan, rules-based manner,” he says.
“That perception may generate a modest tailwind for Bitcoin as part of a broader legitimization of the space.”
According to Lawant, Bitcoin and stablecoins will coexist and grow in a mutually reinforcing way. He specifically pointed to Taproot Assets as a development that should be watched closely. Taproot Assets are a way of using non-bitcoin tokens, such as…
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