The realm of digital finance continues to face significant uncertainty in stablecoin regulation, despite legislative efforts like the GENIUS Act.
Current Situation in Stablecoin Regulation
Caitlin Long, CEO of Custodia Bank, recently shared her views on the state of stablecoin regulation, pointing out the unresolved issues that remain. According to her, the GENIUS Act, while a step forward, does not resolve all fundamental problems, complicating the integration of stablecoins into the traditional financial system.
Overview of the GENIUS Act
The GENIUS Act, enacted in mid-July, aims to create more clarity in the stablecoin industry. Key requirements include:
* Federal Licensing: Stablecoin issuers must obtain federal licenses. * 1-to-1 Reserve Backing: Issuers are mandated to maintain full 1-to-1 reserve backing for their stablecoins. * Annual Audits: Issuers with a market capitalization exceeding $50 billion must undergo annual audits. * Oversight for Foreign Entities: The Act includes compliance and oversight rules for foreign issuers.
Major Hurdles in Stablecoin Regulation
Despite the introduction of the GENIUS Act, critical areas of uncertainty remain. Long emphasized the need for clarity on liability for interbank transfers of tokenized deposits. The lack of clear guidance on these issues continues to pose hurdles to broader acceptance and innovation in the stablecoin industry.
While the GENIUS Act represents a significant step in establishing a framework for stablecoin regulation, lingering questions require attention for stablecoins to fully integrate into the global financial system.
