JP Morgan Says Stablecoin Market Grows 42% Post-GENIUS Act

The stablecoin market is reportedly outgrowing the larger cryptocurrency sector following recent U.S. legislation.

That’s according to a report Tuesday (Sept. 30) by CoinDesk, citing findings from J.P. Morgan that showed that the $300 billion stablecoin market has grown 42% so far this year, double the 21% growth in the overall crypto market.

Since the GENIUS Act — America’s first piece of major stablecoin legislation — was signed in July, the stablecoin market cap has risen 19%, underlining how regulation has driven adoption, the bank’s analysts said.

Circle’s USDC seems to be the biggest beneficiary, the analysts said. After stalling earlier in the year, the company’s market capitalization has jumped during the third quarter, rising from $61.5 billion at the end of June to $73.7 billion by late September, allowing it to command a little more than a quarter of the stablecoin market.

Meanwhile, Circle’s chief rival Tether has seen its dominance recede, falling from 67.5% at the start of the year to 60.4%, the report said.

But while the GENIUS Act could be giving Circle more momentum, the report said a more fragmented market could eventually benefit platforms such as Bullish that offer liquidity services for an increasing slate of stablecoin issuers.

In other stablecoin news, PYMNTS spoke earlier this month with John Ainsworth, general manager at Metallicus; and Jon Ungerland, chief information officer of DaLand CUSO, whose companies are helping St. Cloud Financial Credit Union in Minnesota launch its own digital coin.

The two offered a blunt warning to the community banking space: If members move liquidity to digital assets platforms that can also lend and settle payments through stablecoins, community institutions risk losing out.

“About 18 months ago, it was pretty consistently 1% of deposits leaving institutions on a monthly basis and going to crypto exchanges. Earlier this year, it was about 3%. Now we’re seeing it, you know, edge up to 5% for our clients,” said Ungerland.

“If you’re in the money business and your competitor can do it exponentially faster, cheaper and safer than you, then you can’t compete.”

In the past, community institutions could wait for standards to become more concrete and vendors to fight it out. In the stablecoin era, the “wait and see” window is shrinking.

“You used to think you’ve got three to five to seven years to kind of think this through. That’s no longer the case … staying on the sideline is not an option,” said Ainsworth.