The demand for Ethereum-based DeFi solutions is expected to grow due to the GENIUS bill, potentially driving innovation and the development of Layer 2 solutions to enhance scalability and reduce costs.

Ethereum’s DeFi ecosystem is anticipated to expand, offering diverse opportunities such as liquidity provision, staking, and decentralized lending protocols, solidifying its position as a leading platform.

Tether co-founder Reeve Collins predicts that higher yields from fiat-backed stablecoins will eventually displace traditional stablecoins, further shifting the landscape.

Financial institutions are likely to increase investments in Ethereum-based DeFi products due to pressures to generate returns, which could boost mainstream adoption and liquidity in the sector.

Critics like NYU professor Austin Campbell argue that traditional banks are threatened by yield-bearing stablecoins and accuse opponents of engaging in 'cartel protection' to preserve banking industry dominance.

The US has enacted the GENIUS bill, signed into law by President Donald Trump, which bans yield-bearing stablecoins, marking a major shift in the crypto regulatory landscape and pushing investors toward Ethereum-based DeFi platforms for yield.

This legislation is expected to redirect capital from regulated stablecoins to Ethereum and decentralized finance (DeFi) applications, as investors seek new passive income opportunities, thereby increasing demand for ETH and DeFi services.

Crypto analyst Nic Puckrin notes that the prohibition of stablecoin yields favors Ethereum-based DeFi, which is emerging as the main alternative for generating passive income.

Senator Kirsten Gillibrand warns that yield-bearing stablecoins could undermine traditional banking by reducing demand for loans and banking services, as deposits are diverted to crypto assets.

The legislation could attract more institutional capital into the crypto space, as financial institutions seek onchain yields to meet fiduciary obligations, with increasing interest in staking and yield-generating activities, exemplified by Nasdaq’s application to add staking for the BlackRock ETH ETF.

CoinFund President Christopher Perkins emphasizes that the lack of yield on the dollar makes DeFi increasingly attractive for preserving value amidst fiat inflation.