GENIUS Act Boosts Attention on Yield-Generating Stablecoins as Ether Surges 6% Against Bitcoin, Analyst Notes

Ether Surges Against Bitcoin as GENIUS Act Casts Doubt on Yield-Bearing Stablecoins

Ethereum’s ether (ETH) is gaining momentum over bitcoin (BTC) as investors brace for potential regulatory shifts that could impact the stablecoin market. The move comes amid rising expectations that the U.S. GENIUS Act will ban yield-generating stablecoins, according to Markus Thielen, founder of 10x Research.

On Tuesday, the ETH/BTC trading pair jumped nearly 6% to 0.02670 on Binance, its strongest showing since mid-May, per TradingView data. The breakout from a multi-week range suggests further ether strength ahead. In dollar terms, ETH climbed over 4%, briefly topping $3,100—its highest level since February.

Thielen attributes the rally to growing anticipation around the GENIUS Act, a proposed U.S. law that would restrict stablecoin issuers from offering interest-like returns to users.

“If passed, the legislation would elevate Ethereum’s importance in the crypto ecosystem,” Thielen wrote in a client note shared with CoinDesk.

At the center of this regulatory spotlight is Ethena’s USDe, a $5 billion synthetic dollar built on Ethereum. USDe generates yield by shorting perpetual futures in proportion to ETH deposits—an approach known as delta hedging or cash-and-carry arbitrage.

This shorting activity, according to Thielen, exerts persistent downward pressure on ether’s futures markets and narrows the spread between futures and spot prices.

“Ethena makes up about 4% of Ethereum’s $26 billion open interest. Its continuous futures selling has weighed on ETH prices,” he noted.

In response to the evolving regulatory environment, Ethena has reportedly approached the U.S. Securities and Exchange Commission (SEC), arguing that USDe is a payment instrument—not a security—and therefore should fall outside the scope of the GENIUS and STABLE Acts.

Headquartered in Lisbon, Ethena’s user base and capital inflows primarily come from outside the U.S., creating a gray area around how U.S. rules would apply. Thielen suggests that despite regulatory uncertainty, markets are viewing the outlook favorably.

“Were Ethena forced to comply, it might halt ETH purchases altogether,” he said. “But the continued rally in ENA-USDT and rising Ethereum funding rates indicate a more bullish market interpretation. Since USDe isn’t available in the U.S., Ethena may not be directly affected.”

Ethena’s performance has been robust. The protocol has earned nearly $300 million in total revenue over the past 12 months and generated $15 million in fees last month alone, according to TokenTerminal—ranking it just behind Tether, Ethereum, Circle, and Solana.

“Ethena is thriving in the current market, with hedge funds increasingly deploying funding arbitrage strategies,” Thielen added. “We expect this trend to support further inflows into Ethereum ETFs.”

The GENIUS Act, which passed the Senate with bipartisan support in June, is scheduled for a House floor vote by Thursday.