<div id="readability-page-1"><div><div><h2>Stablecoins generate interest, liquidity circulates</h2>The legislation is progressing smoothly and is expected to bring multiple benefits to stablecoins, tokenization, and DeFi development by mid-year. However,The prohibition of passive interest generation for stablecoins will also make the on-chain future unclear.This is not unfounded worry. From ETFs and DAT to Wall Street's RWA attempts, there is a constant struggle for crypto pricing power. Compliance often means acknowledging an established framework, extinguishing the flame of grassroots innovation in the name of stability.ETFs sacrificed BTCFi, DAT created a systemic crisis, and RWA rejected existing public chains.ETFs sacrificed BTCFi, DAT created a systemic crisis, and RWA rejected existing public chains. The Clear Act, on the surface, compresses the arbitrage space for offshore dollar stablecoins like $USDT, but in reality, by separating and combining payments and returns, the US is attempting a new dollar circulation model beyond gold, oil, and credit. The story of payment stablecoins is essentially over; the chapter on stablecoin interest-bearing is about to begin. A missing piece in the three-pronged approach: payment stablecoins. Setting my heart on money learning pleasure more than Thee. I've always wondered, how exactly will the Genius Act make the narrative of &#34;payment stablecoins&#34; a reality? As Wall Street giants deploy tokenization strategies on the eve of the clear bill's passage, this doubt is growing. Yes, I'm not wrong; they are deploying tokenization businesses to generate interest on stablecoins. On May 8th, BlackRock, in addition to BUILD, planned to launch two new TMMFs (Tokenized Money Market Funds) named BSTBL and BRSRV. On May 13th, JPMorgan Chase, in addition to MONY, launched its second TMMF, JLTXX. Moreover, BlackRock explicitly stated that the new products are to meet the growing needs of stablecoin issuers, and JPMorgan Chase also emphasized compliance with the relevant qualification requirements of the Genius Act. A closer look at the provisions reveals that the Genius Act does indeed increase the wording regarding tokenization, allowing tokenized forms of US Treasury bonds and the US dollar to be used as reserves for stablecoin issuance. This doesn't clarify the relationship between stablecoins, tokenization, and payments; further exploration is needed. Under the Genius Act, stablecoin issuance qualifications are allocated to the OCC's federally chartered banking mechanism. These banks cannot accept deposits and must maintain sufficient reserves, preventing them from encroaching on commercial bank lending business. In this context, policy creates market demand; stablecoin issuers either build their own reserves, as seen with USDT and USDC's massive purchases of US Treasury bonds, surpassing many sovereign nations. Alternatively, directly purchase RWA assets such as TMMF, which is crucial for stablecoins like USDS/sUSDS that rely on profit sharing to attract users. This eliminates the complex process of subscribing to and redeeming US Treasury bonds; on-chain profit sharing and real-time interest generation are more in line with user habits. According to data from @ElectricCapital, 98% of BlackRock's BUIDL shares were subscribed by various interest-bearing stablecoin issuers. Moreover, the most ingenious aspect is that retail investors cannot directly purchase tokenized products. Policy shapes the market structure, which is the secret to how this brilliant legislation created a &#34;payment stablecoin.&#34; A law cannot rely solely on coercion to compel market participants to comply; otherwise, USDT wouldn't have remained underground for so many years. Only by adapting to market trends can one achieve significant results with minimal effort. <figure><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468448_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="1038" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468448_image3.png"/><figcaption>Image description: TMMF supports payment stablecoinData source: @ElectricCapital</figcaption></figure>BlackRock's tokenized products, although circulating on-chain, cannot be purchased &#34;without permission&#34; and still need to comply with KYC, qualified investor and other review conditions, basically targeting B End-user sales. You can't monitor decentralized individual buying and selling, just as the US government can't monitor the circulation of cash dollars, but monitoring a few giants is easy. By recognizing tokenized assets, the US cleverly constructs a feasible framework between stablecoin issuers, Wall Street giants, and regulators. Stablecoins received by users can only be used for payments because they don't earn interest. A brilliant bill binds stablecoins and tokenization together, answering the earlier question by making stablecoins the end-user retail layer of US Treasury bonds. Previously, the US dollar relied on commercial bank lending mechanisms; in the future, it will rely on the intermediary role of tokenized companies. Arbitrage opportunities, stablecoin interest generation. If the Genius Act acknowledges that tokenization created payment stablecoins, then the Clarity Act restricts the development of stablecoin interest generation driven by tokenization. The importance of interest generation does not lie in the banking industry's concerns about deposit outflows; opening an account at JPMorgan Chase is difficult, and making money on Coinbase is difficult. Observe that under the Clarity Act, if users choose to stake for interest, ideally, stablecoin issuers' interest sources can only be US Treasury products. However, this raises new issues. Stablecoins like Sky/Ethena, which issue on-chain stablecoins, don't necessarily need an OCC banking license, so new arrangements are needed for interest generation, especially for DeFi. Excessive regulatory costs are the fundamental reason why Congress has made &#34;lenient&#34; arrangements for DeFi development. In addition, the US dollar needs stablecoins for distribution. <figure><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468449_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="814" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7468449_image3.png"/><figcaption>Image description: Giants vying for clear legislationImage source: @zuoyeweb3</figcaption></figure>This distribution falls into two main categories: one is the B-end customer acquisition path between giants, and the other is on-chain and cross-regional C-end arbitrage issuance. Among industry giants, the stakes lie in the strictness of the &#34;ban on passive interest generation,&#34; and their intermediary roles differ accordingly. If DeFi is also restricted, the consortium blockchain model may revive; if it's relatively lenient, deeper cooperation with on-chain stablecoins is possible. Furthermore, the intermediary model of these giants is difficult to bypass. Ondo and similar platforms choose to act as retail distributors for these giants, while OSL and similar platforms choose the overseas compliant USD stablecoin track. Continuing this line of thought, Sky's addition of diversified &#34;RWA&#34; to USDS reserves is essentially leveraged arbitrage, subtly converting full reserves into partial reserves. A key emerging demand is how to boost stablecoin yields on top of US Treasury bonds. This requires more complex financial engineering designs, which is where various DeFi yield strategies come in. It can be observed that the interest-earning mechanism targets offshore USD stablecoins like $USDT, allowing BlackRock's TMMF to replace its role as a Treasury bond buyer. For on-chain USD and compliant offshore USD, new arbitrage opportunities will emerge. They cannot consistently earn large-scale US Treasury bond yields and must continuously promote utilization growth, indirectly promoting the circulation of USD and stable purchases of US Treasury bonds. Between these two dynamics, users will try to use stablecoins as much as possible because holding them will depreciate, while the interest generated from their use will flow back into the US financial system, since the underlying asset is US Treasury bonds. This is the true purpose of the Clear Act: to create individual demand for the US dollar globally. Stablecoin issuance requires US Treasury bonds, and stablecoin interest generation also requires US Treasury bonds, ultimately completing the cycle. In conclusion, to transcend the limitations of sovereign states, it is necessary to rely on this rigid demand for payments. However, promoting the adoption of stablecoins must rely on a direct mechanism like returns. The Genius Bill and the Clarity Bill both focus on the entanglement of stablecoins and interest-bearing activities. Their inability to regulate DeFi and cross-regional arbitrage necessitates Wall Street acting as an intermediary to control yields. This also provides reassurance that regardless of whether the Clarity Bill passes as scheduled, the arbitrage mechanism will never cease.</div></div></div>

The Clear Act aims to reshape the stablecoin landscape by separating payments from interest generation, potentially limiting passive income opportunities for stablecoins. As major financial institutions like BlackRock and JPMorgan Chase launch tokenized money market funds, the legislation seeks to create a new dollar circulation model. However, it raises questions about the relationship between stablecoins, tokenization, and payments, as compliance with the Genius Act becomes crucial for stablecoin issuers. The evolving framework may restrict interest generation while positioning stablecoins as a retail layer for US Treasury bonds.

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