The US Senate has taken a significant step towards federal regulation of stablecoins by passing the GENIUS Act, which impacts the cryptocurrency industry.
Importance of the GENIUS Act
The GENIUS Act, introduced by Republican Senator Bill Hagerty, marks the first significant piece of legislation regarding cryptocurrencies in US history. Hagerty thanked senators who expressed their support ahead of the vote.
Key Provisions of the New Law
The new law requires stablecoins to be fully backed only by US dollars or similar liquid assets. It also mandates annual audits for stablecoin issuers with a market value over $50 billion. Strict criteria are set for large publicly traded companies like Meta and Amazon, which cannot issue stablecoins unless specific conditions concerning financial risk and user data privacy are met.
Impact on the Market and Stakeholders
Another noteworthy provision of the law is the granting of 'bankruptcy priority' to stablecoin owners, allowing them to recover their funds first in the event of potential bankruptcy. This provision is designed to protect existing depositors in banks.
The passage of the GENIUS Act in the US Senate creates a new legal framework for stablecoins and could significantly change the regulation and use of digital assets in the country.
