The U.S. Treasury has launched a process to collect comments on methods to detect and prevent illicit activity in the digital asset space. This initiative is part of the implementation of the new federal stablecoin law.
Overview of the New Stablecoin Law
The law, known as the GENIUS Act, was signed into effect by President Donald Trump in July. It requires stablecoins to be fully backed by U.S. dollars or liquid assets and mandates annual audits for issuers with market capitalizations above $50 billion. The law is set to take effect 18 months after the signature, or 120 days after Treasury and the Federal Reserve finalize implementing regulations.
Requirements for Financial Institutions
The Treasury has suggested that financial institutions utilize various tools such as blockchain analytics, artificial intelligence, and digital identity verification. Comments are being accepted until October 17, and submissions will be analyzed to prepare reports for the Senate and House committees.
Industry Reaction and Next Steps
Banking groups have raised concerns about possible loopholes in the legislation regarding prohibitions on paying interest to stablecoin holders. TD Cowen analyst Jaret Seiberg noted that the flight to stablecoins could pose a greater threat than during the 2008 crisis, as it would be quick and easy for consumers to convert deposits.
The enacted stablecoin law marks a significant step towards federal oversight of digital assets in the U.S. As interest in this sector grows, it will be important to monitor its development.
