Compliant Stablecoins Will Become the 'Money Layer of the Internet:' Canaccord

The wider promise of stablecoins, cryptocurrencies whose value is tied to another asset, has remained elusive until now due to regulatory uncertainty, broker Canaccord said in a research report Wednesday. The passage of the GENIUS Act in the U.S. Senate changes everything, it said.

The legislation, whose full name is Guiding and Establishing National Innovation for U.S. Stablecoins Act, is designed to bring stablecoin innovation back to the U.S. Winning Senate support was harder than is likely in the House of Representatives, the report said. Given the bill's bipartisan support, stablecoin legislation in the U.S. is almost here.

"Stablecoins represent a true money layer being added to the internet — in essence programmable money," Canaccord said.

"The promise of stablecoins finding use cases beyond as a crypto trading pair could be on the horizon" because "compliant stablecoins are in effect recognized by the U.S. government as the same as cash," analysts led by Joseph Vafi wrote.

Stablecoin values are tied to assets like the U.S. dollar or gold. They play a major role in cryptocurrency markets providing, among other things, a payment infrastructure, and are also used to transfer money internationally.

Canaccord sees stablecoins as "providing real productivity to the velocity of money and enterprise working capital balances." Stablecoins allow transactions to be processed instantaneously and are significantly cheaper than traditional routes.

Given their requirement to be fully backed, compliant stablecoins could become a significant source of demand for short-term U.S. Treasuries, Canaccord said.

"GENIUS compliant stablecoins could be a driver in dollarizing the global economy as their usage spreads cross border," the authors wrote.

Stablecoin adoption will help to advance the wider crypto industry, the report added.

Read more: Stablecoins to Evolve Into 'Money Rail of Internet' Once GENIUS Act Is Passed: Bernstein