Ether Climbs as GENIUS Act Targets Yield-Bearing Stablecoins
Ether (ETH) is outperforming bitcoin (BTC) as markets react to the anticipated passage of the GENIUS Act—a U.S. bill that could ban interest-bearing stablecoins and reshape crypto market structure. According to 10x Research founder Markus Thielen, this shift is putting Ethereum back in the spotlight.
The ETH/BTC ratio rose 5.96% to 0.02670 on Binance Tuesday, marking its strongest daily performance since May 13. Ether also gained more than 4% in dollar terms, briefly surpassing $3,100 for the first time in five months.
Thielen attributes the rally to growing expectations that the GENIUS Act will prevent U.S.-based stablecoin issuers from offering yield products. “If passed, it would enhance Ethereum’s role in the digital asset ecosystem,” he said in a note to clients.
Much of the market focus is on Ethena’s USDe, a $5 billion synthetic stablecoin built on Ethereum. USDe generates returns through a delta-neutral strategy—shorting ETH perpetual futures in proportion to collateral deposits, a method known as cash-and-carry arbitrage.
This structure has long been viewed as a drag on ETH performance, as continuous shorting in the futures market can suppress price momentum and narrow the futures-spot basis.
“Ethena currently accounts for about 4% of Ethereum’s $26 billion open interest,” Thielen said. “Its consistent selling in futures has applied downward pressure on ETH.”
In light of pending U.S. legislation, Ethena has reportedly approached the SEC, arguing that USDe functions as a payment instrument, not a security, and therefore falls outside the scope of both the GENIUS and STABLE Acts.
With its operations based in Lisbon and capital inflows largely from outside the U.S., Ethena’s regulatory exposure remains uncertain. Still, Thielen believes market sentiment is skewing optimistic.
“If Ethena had to comply with the stablecoin bill, it might need to stop buying ETH altogether,” he said. “But ENA-USDT continues to rise, and Ethereum funding rates are climbing, suggesting the market sees limited direct impact—especially since USDe isn’t offered in the U.S.”
Despite the regulatory cloud, Ethena continues to perform well. The protocol has generated nearly $300 million in revenue over the past year and earned $15 million in fees in the past month alone, according to TokenTerminal. That places it among the top-performing platforms, behind only Tether, Ethereum, Circle, and Solana.
“Rising funding rates are encouraging hedge funds to engage in arbitrage strategies,” Thielen noted. “We expect that to drive further inflows into Ethereum-based ETFs.”
The GENIUS Act, which passed the Senate in June with bipartisan backing, is expected to come to a vote in the House by Thursday.
