Ethereum Price Jumps as GENIUS Act Threatens Yield-Bearing Stablecoins
The price of Ethereum is surging fast, leaving Bitcoin in its wake. And the reason? The looming U.S. regulatory crackdown targeting yield-bearing stablecoins.
Ethereum (ETH) posted a strong rally this week, shooting over $3,100, its highest price since February. According to market data, the ETH/BTC ratio climbed nearly 6% to 0.02670 on Binance, marking its most robust performance in over two months.
At the heart of this movement is the GENIUS Act, short for Guarding End-Users in Stablecoin Usage. The bill, recently passed by the U.S. Senate and heading for a House vote, seeks to ban stablecoins offering interest-like returns.
That’s rattling the foundations of projects like Ethena, which rely on those very mechanisms to deliver yield to users.
Markus Thielen, founder of 10x Research, explained the situation in a note shared with CoinDesk: “That would potentially reinforce Ethereum’s importance within the digital asset ecosystem.”
According to Thielen, the market is betting on Ethereum becoming a more central pillar of the crypto financial structure, especially if yield-bearing stablecoins like Ethena’s $5 billion USDe get restricted in the U.S.
Ethena’s system uses a complex arbitrage model—delta-hedging, by shorting perpetual futures with ETH as collateral. This structure is at risk of being squeezed by new regulations.
“Ethena currently represents about 4% of Ethereum’s $26 billion open interest, and by consistently selling futures, it has exerted downward pressure on ETH prices,” Thielen noted.
Institutional confidence in Ethereum seems to be growing in parallel. Just last week, SharpLink Gaming made headlines after moving nearly $49 million into ETH, an acquisition that sparked further excitement around Ethereum’s long-term value. See how this high-stakes ETH buy signals deepening trust in the asset.
The GENIUS Act has placed a bright spotlight on Ethena, especially as its operations blur regulatory boundaries.
The firm, headquartered in Lisbon, has approached the U.S. SEC to argue that its synthetic dollar isn’t a security, but rather a payment instrument—therefore outside the reach of the GENIUS and STABLE Acts.
Crucially, USDe isn’t offered within the U.S., giving Ethena some breathing room. Still, the regulatory fog hangs overhead.
“If Ethena were to comply with the U.S. stablecoin bill, it could be forced to stop buying Ethereum altogether. However, the market may be interpreting this dynamic differently, ENA-USDT continues to rally, supported by rising Ethereum funding rates,” Thielen explained.
Meanwhile, Ethena is thriving in other metrics. The protocol has raked in close to $300 million in revenue over the past year and $15 million in fees just last month, according to TokenTerminal.
“Ethena is performing exceptionally well with the rise in funding rates, which is encouraging numerous hedge funds to set up funding arbitrage strategies. We anticipate this will translate into increased inflows for Ethereum ETFs,” said Thielen.
As traders and institutional players watch closely, the GENIUS Act’s next step through the House of Representatives could prove pivotal—not just for U.S. stablecoin projects, but for Ethereum’s growing global footprint.
With its price rising and market relevance expanding, Ethereum is increasingly shaping up as the go-to digital asset amid tightening U.S. crypto regulations.
