The total market value of

cryptoassets

surged past US$4 trillion for the first time, driven by a rally in altcoins and momentum from a sweeping United States legislative push to regulate the sector.

The milestone followed the passage of the first-ever federal legislation for

stablecoins

, a key accomplishment during what lawmakers have dubbed “Crypto Week.” The bill, backed by Republicans and championed by President

Donald Trump

, introduces federal or state oversight of dollar-linked stablecoin, aiming to legitimize a US$265 billion market that Citigroup Inc. analysts project could grow to US$3.7 trillion by 2030.

Altcoins — a catch-all term for tokens besides Bitcoin — led the latest leg of the rally, with Ether jumping 22 per cent over the past five days. Bitcoin, the industry’s benchmark asset, hit a record US$123,205 earlier this week. Uniswap surged as much as 24 per cent on Friday, while Solana gained 6.5 per cent at one point.

Thursday also saw the House pass a broader crypto market structure bill, which now awaits Senate consideration.

Investors have continued to flood into U.S.-listed crypto ETFs. Bitcoin funds have attracted US$5.5 billion in inflows so far in July, while Ether ETFs brought in US$2.9 billion.

The legislation marks a political coming-of-age for the digital assets industry, which rebounded from the confidence-rattling collapse of Sam Bankman-Fried’s FTX crypto exchange less than three years ago to pour hundreds of millions of dollars into the election last year of friendly lawmakers.

Democratic critics such as Senator Elizabeth Warren and Representative Maxine Waters warned the new stablecoin regulatory regime won’t do enough to protect consumers and could lead to pressure for government bailouts if issuers of the digital tokens fail.

But the nation’s most influential bankers are already grappling with the challenge the new measure is likely to accelerate. On earnings calls this week, JPMorgan’s

Jamie Dimon

, Bank of America’s Brian Moynihan and Citigroup’s Jane Fraser each described the upstart “digital dollar” as a potential threat to the banking industry’s grip on payments — and signalled they’re preparing to respond.

The digital tokens could potentially eat at bank deposits, as some consumers move money into stablecoin accounts. It could also broaden the stablecoins’ use in cross-border money transfers and in payments, and open the way for everyone from banks to card networks to technology firms issuing their own stablecoins. In recent weeks, a slew of major banks including JPMorgan said they are looking at being involved in stablecoins.

U.S.-based crypto companies that issue dollar-denominated stablecoins such as Circle Internet Group Inc. may be in the most immediate position to gain.

While Circle finished Thursday up less than 1 per cent, it has jumped 25 per cent to US$235.08 this week. Coinbase Global Inc., which has a revenue sharing agreement with Circle, rose 3.2 per cent to US$410.75, a record high.

Bitcoin was down slightly in the last 24 hours, after hitting its all-time high of about $123,000 on July 14, partly on optimism about the stablecoin bill’s prospects.

Stablecoins so far have largely been used for transactions related to the cryptocurrency market rather than business payments.

The legislation “provides the stablecoin industry with the degree of legitimacy they have been craving” said Eswar Prasad, a senior fellow at the Brookings Institution. “And the bonus is that it comes with what I view as relatively light-touch regulation.”

The measure sets regulatory rules for dollar-backed stablecoins, including a requirement for firms to hold dollar-for-dollar reserves in short-term government debt or similar products overseen by state or federal regulators.

  • Bitcoin soars past US$120,000 as U.S. congress starts ‘Crypto Week’
  • Amazon and Walmart weigh issuing own stablecoins, WSJ says

Trump and his family have ties to a series of digital-asset businesses including World Liberty Financial, a platform that has its own branded token as well as a stablecoin.

Crypto ventures have added at least US$620 million to Trump’s personal fortune in the span of months, according to the Bloomberg Billionaires Index.

Some Democrats unsuccessfully tried to add a provision to the legislation that would bar elected officials such as Trump and their families from stablecoin business ventures.

With assistance from Steven T. Dennis and Dave Liedtka.

Bloomberg.com