The U.S. Senate has taken a significant step in regulating digital assets by advancing the GENIUS Act for stablecoins. This legislation marks the first of its kind in the country and poses several questions for both the industry and regulators.
What is the GENIUS Act?
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is the first U.S. bill that regulates cryptocurrencies. It provides more clarity and confidence in the use of stablecoins, potentially leading to greater adoption and industry growth.
According to its supporters, the bill will protect consumers, promote innovation, and hold bad actors accountable. It also introduces ethical measures, such as a ban on Members of Congress and their families profiting from stablecoin ventures.
What Does the GENIUS Act Do?
The GENIUS Act establishes clear rules for "payment stablecoins" like USDT, USDC, and RLUSD that are pegged to the U.S. Dollar (USD). Key provisions include:
* 1:1 backing with U.S. Dollar reserves and short-term treasuries without rehypothecation allowed. * Monthly reserve disclosure and mandatory annual audits for issuers exceeding $50 billion in circulation. * Federal-state dual licensing, allowing federally oversight for issuers above $10 billion, while smaller ones adhere to state standards. * Consumer protections, including legal redemption rights and bankruptcy preferences for holders. * Compliance with Anti-Money Laundering (AML) and sanctions under the Bank Secrecy Act.
Market Response to the New Stablecoin Bill
Industry participants, such as the American Bankers Association, echoed the need for a fairer policy that encourages innovation while protecting the financial system. ABA President Rob Nichols stated: "We will continue to work with lawmakers to pursue a final stablecoin bill that embraces innovation without undermining our trusted financial system."
The advancement of the GENIUS Act in the U.S. Senate could significantly impact stablecoin regulation and the cryptocurrency industry as a whole. The attention now turns to the House of Representatives and the necessity for consensus on the bill.
