Bitcoin surged to a record high of $111,816 on Thursday, fueled by optimism surrounding potential U.S. regulations for digital assets.
Regulatory Momentum Boosts Investor Confidence
The U.S. Congress is progressing on the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, aiming to establish the first federal regulations for stablecoins—digital currencies pegged to the U.S. dollar. This legislative move has invigorated investor sentiment, leading to over $3.6 billion in inflows into U.S. Bitcoin exchange-traded funds (ETFs) this month, marking the highest since January.
The GENIUS Act proposes that stablecoin issuers maintain 1:1 reserves with high-quality assets and comply with anti-money laundering regulations. While the bill has garnered bipartisan support, some Democrats express concerns about consumer protections and potential risks to financial stability.
Broader Market Rally
Bitcoin’s ascent has positively influenced other cryptocurrencies. Ethereum, the second-largest cryptocurrency by market capitalization, rose 4.5% to $2,619, and Solana increased by 1.9% to $176. Although both remain below their all-time highs, these gains reflect a broader market uptrend.
Analysts attribute this rally to a combination of factors, including strong performance in public equity markets, increased ETF inflows, and corporate acquisitions of Bitcoin. Thomas Perfumo, global economist at crypto exchange Kraken, noted that unless these supportive conditions change, the market is likely to continue its upward trajectory.
Major corporations are increasingly incorporating Bitcoin into their treasuries. Strategy, the largest publicly listed Bitcoin holder, recently purchased an additional 1,895 BTC for approximately $180 million, bringing its total holdings to 555,450 BTC. Similarly, 21, a Bitcoin acquisition vehicle backed by Cantor Equity Partners, has expanded its Bitcoin reserves.
Potential Expansion of Stablecoin Market Despite Challenges and Criticisms
Standard Chartered projects that the implementation of the GENIUS Act could expand the stablecoin market from its current valuation of $240 billion to $2 trillion by 2028. This growth would likely increase demand for U.S. Treasuries, as stablecoin issuers are required to hold reserves in such assets, thereby reinforcing the dollar’s global dominance.
Despite the optimism, the GENIUS Act faces opposition. Critics argue that the bill may not provide sufficient consumer protections and could blur the lines between traditional banking and tech companies. Concerns also exist regarding the potential for increased financial instability and the use of digital assets in illicit activities.
Furthermore, the bill’s dual regulatory model—federal oversight for issuers with over $10 billion in market capitalization and state-level regulation for smaller entities—could lead to inconsistencies and challenges in enforcement.
