Ethereum’s native token, ether (ETH), is surging against bitcoin (BTC) as the U.S. Congress inches closer to passing the GENIUS Act, a bill poised to ban yield-bearing stablecoins that offer interest-like returns. This development, according to Markus Thielen, founder of 10x Research, is casting a spotlight on Ethereum’s increasingly pivotal role in the digital asset sphere.
Ether’s Ascent and the GENIUS Act
On Tuesday, the ether-bitcoin ratio saw a significant leap of over 5.96%, hitting 0.02670—its best performance since mid-May, according to TradingView data. This upswing not only broke through a multi-week trading range but also hinted at further potential gains for ether. In dollar terms, ether climbed more than 4%, surpassing the $3,100 mark for the first time since February. As explored in our recent coverage of Ethereum Price Eyes $4K as GENIUS Act Vote Sparks Bullish Surge, the legislative developments are contributing to a bullish sentiment around Ethereum.
“The anticipation surrounding the GENIUS Act seems to be fueling ether’s climb,” Thielen noted in a client memo shared with CoinDesk. The legislation aims to curtail U.S. stablecoin issuers from providing interest, potentially enhancing Ethereum’s significance in the crypto ecosystem.
Ethena’s Role Amid Regulatory Shifts
The GENIUS Act has also thrust Ethena’s $5 billion synthetic dollar, USDe, into the limelight. Ethena employs delta-hedging and cash-and-carry arbitrage via shorting perpetual futures to generate yield on USDe. This mechanism has long been thought to exert bearish pressure on the futures market, affecting the futures-spot price basis.
“Ethena accounts for about 4% of Ethereum’s $26 billion open interest. Their strategy of consistently selling futures has contributed to downward pressure on ETH prices,” Thielen explained. Ethena, headquartered in Lisbon, is actively seeking clarity from the SEC on synthetic dollars. The firm argues that USDe is a payment instrument, not a security, potentially placing it outside the GENIUS Act’s purview.
Despite not offering USDe in the U.S., Ethena’s operations might still face scrutiny under new regulatory frameworks. Thielen remarked, “If compelled to comply with the U.S. stablecoin bill, Ethena might cease Ethereum purchases. Yet, the market seems to view this differently—ENA-USDT is rallying, buoyed by rising Ethereum funding rates.” This optimism is mirrored in our analysis of Ethereum Is Already Outperforming Bitcoin In July, Is Altcoin Season Here?, where we examine Ethereum’s strong performance relative to Bitcoin.
A Bright Spot for Ethereum
Ethena’s financial performance is noteworthy. Over the past year, it has generated nearly $300 million in revenue, second only to giants like Tether and Circle. The protocol also raked in $15 million in fee revenue last month alone. Thielen highlighted, “With the uptick in funding rates, hedge funds are keen on funding arbitrage strategies. This could bolster inflows into Ethereum ETFs.”
As the GENIUS Act, endorsed by the Senate in June, heads to the House floor for a vote later this week, the crypto industry is watching closely. The bill’s progression underscores a significant moment for stablecoin regulation in the U.S., potentially reshaping the landscape for Ethereum and other digital assets.
The outcome of this legislative journey holds implications not just for Ethereum, but for the broader crypto ecosystem. Will the GENIUS Act fortify Ethereum’s role, or will it face hurdles? Only time will tell.
Source
This article is based on: Ether Races 6% Against Bitcoin as GENIUS Act Puts Spotlight on Yield-Bearing Stablecoins: Analyst
Further Reading
Deepen your understanding with these related articles:
- Ethereum Surge Sparks Altcoin Rotation: Here Are Analysts’ Top Picks
- Crypto ETF Investors Want ‘Ethereum Over Bitcoin’ Amid Surging Demand: CoinShares
- Bitcoin, Ether ETFs clock second-biggest day of inflows on record
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
