IMF working paper Stablecoins and the Future of Payments – Evidence from Financial Markets reveals that financial markets expect stablecoins to play a transformative role in the global payments ecosystem, driven by new regulatory clarity.
Using high-frequency data surrounding the passage of the U.S. GENIUS Act in July 2025, the study found that the creation of a federal framework for payment stablecoins reduced the market capitalization of incumbent U.S. payment firms by 18% (approximately $300 billion).
The impact was most severe for cross-border payment firms, which saw a 27% decline due to stablecoins' inherent advantage in borderless, 24/7 infrastructure. Conversely, firms with strong network effects (like Visa) or those already engaged in "crypto-assets" were more resilient, suggesting that early adoption of blockchain technology serves as a critical strategic hedge.
Key Findings and Post-Legislation Trends
The GENIUS Act Impact: Established a 100% reserve-backing requirement and independent audits, turning stablecoins into a credible competitor for traditional fiat "rail" systems.
Heterogeneous Market Response: While cross-border specialists suffered, "crypto-engaged" firms saw significantly smaller declines, prompting a post-legislation surge in payment firms offering digital asset services.
Earnings Call Sentiment: Mentions of stablecoins in corporate earnings calls increased sharply after the bill's passage, indicating a widespread shift in incumbent strategies to adapt to the new regulatory environment.
Benchmarking Competition: The market shock from the GENIUS Act was found to be larger than the impact of the Durbin Amendment or the anticipated launch of the Digital Euro.
Network Effect Insulation: Major network operators remained partially protected from the shock, as their established user bases provide a barrier to entry that standalone stablecoin issuers have yet to breach.
What is the "GENIUS Act"? The GENIUS Act (2025) is a landmark piece of U.S. legislation that established the first comprehensive federal regulatory framework for payment stablecoins. It plays a role in professionalizing the stablecoin market by mandating 100% reserve backing, monthly public disclosures, and rigorous independent audits for large-scale issuers. The Act is supported by the goal of ensuring that digital dollars can function as a safe and reliable medium of exchange within the traditional financial system. By removing the "regulatory fog" surrounding blockchain-based payments, the GENIUS Act reflects growth in the transition of stablecoins from speculative assets to mainstream payment instruments, mechanically driving competition against legacy financial institutions.
Policy Relevance: Global Benchmarking and the Indian Context
Scaling Competitive Regulatory Shocks: The IMF study uses India as a critical benchmark, comparing the GENIUS Act's impact to the Reserve Bank of India’s (RBI) 2024 regulatory action against Paytm Payments Bank.
Internalising Regulatory Compliance: The 2024 prohibition on Paytm for noncompliance caused a massive stock price decline for One97 Communications Limited (OCL), serving as a baseline for how "hard" regulatory interventions reshape fintech market valuations.
Bypassing High Remittance Costs: For Southern Asia, the 27% market hit to cross-border firms is supported by the potential for stablecoins to mechanically reduce the cost of remittances, a key driver for the regional employment needs discussed in UNIDO briefs.
Supporting "Viksit Bharat" Digital Infrastructure: India's intensely competitive digital payments landscape contributes to the global evidence that "crypto-engaged" firms are better positioned to survive the next wave of technological disruption.
Leveraging Digital MRV: Just as the Indian Carbon Market Portal uses digital verification for credits, the GENIUS Act relies on digital transparency for reserves, reflecting a global trend toward "Always-on, 24/7" financial monitoring.
Follow the Full Working Paper Here: IMF: Stablecoins and the Future of Payments
