Ether Outpaces Bitcoin as GENIUS Act Sparks Focus on Yield-Bearing Stablecoins

Ethereum’s native token, ether (ETH), is outperforming bitcoin (BTC) as traders brace for potential restrictions on yield-generating stablecoins under the looming U.S. GENIUS Act, according to Markus Thielen, founder of 10x Research.

The ETH/BTC pair on Binance surged 5.96% to 0.02670 on Tuesday, marking its strongest performance since May 13, based on TradingView data. The rally broke a multi-week consolidation range, signaling potential for continued ether strength. In U.S. dollar terms, ether climbed over 4%, briefly surpassing $3,100 for the first time since February.

According to Thielen, the market is reacting to growing expectations that the GENIUS Act—a stablecoin regulation bill moving through Congress—will prohibit U.S. issuers from offering interest-bearing stablecoins.

“Such a move would reinforce Ethereum’s role in the digital asset ecosystem,” Thielen wrote in a note to clients shared with CoinDesk.

The legislation has drawn increased attention to Ethena’s USDe, a $5 billion synthetic dollar built on Ethereum. USDe generates yield through a delta-neutral strategy—shorting ETH perpetual futures in proportion to user-deposited collateral. This “cash and carry” trade has long been believed to suppress ETH prices by increasing sell pressure in futures markets and compressing the futures-spot spread.

“Ethena currently accounts for around 4% of Ethereum’s $26 billion in open interest. Its consistent selling of futures has added downward pressure on ETH,” Thielen said.

Ethena has reportedly sought guidance from the U.S. Securities and Exchange Commission (SEC), arguing that USDe is a payment tool—not a security—and therefore falls outside the jurisdiction of both the GENIUS Act and the STABLE Act, which target stablecoin issuers operating in the U.S.

Headquartered in Lisbon, Portugal, Ethena primarily sources capital from outside the U.S., raising questions about how U.S. regulations will apply. However, Thielen notes that the market may be pricing the risk differently.

“If Ethena were forced to comply with U.S. rules, it might have to stop purchasing ETH,” he said. “Yet ENA-USDT continues to rise, buoyed by stronger Ethereum funding rates. Since USDe isn’t available in the U.S., Ethena may not be directly affected.”

Despite the regulatory uncertainty, Ethena has shown strong performance. The protocol has generated nearly $300 million in total revenue over the past year, trailing only Tether, Ethereum, Circle, and Solana, per TokenTerminal. Monthly fee revenue reached $15 million in June.

“Ethena is thriving amid rising funding rates, which is encouraging hedge funds to pursue arbitrage strategies,” Thielen added. “We expect this momentum to boost inflows into Ethereum ETFs.”

The GENIUS Act, which passed the Senate in June with bipartisan backing, is expected to head to a full vote in the House by Thursday.