The US Senate is preparing to hold an important vote on the GENIUS Act, which aims to establish a regulatory framework for stablecoins. This legislation promises to significantly alter the approach to stablecoin regulation both in the US and abroad.
Key Regulations Proposed by the GENIUS Act
The GENIUS Act introduces several critical regulations for stablecoins. Foremost is the requirement that all stablecoin issuers fully back their coins with US dollars or assets with equivalent liquidity. This condition is designed to ensure the financial stability of major stablecoin projects.
Additionally, the Act requires issuers with a market capitalization exceeding $50 billion to undergo annual independent audits. This will provide the market with necessary financial transparency and health regarding large stablecoin projects. Foreign issuers, such as Tether (USDT), will also be compelled to comply with established standards.
Legislative Journey of the GENIUS Act
An initial vote in the Senate passed on Wednesday, allowing the bill to advance to the final vote. If the GENIUS Act passes the Senate, it will then move to the House of Representatives. However, negotiations will be necessary as the House Financial Services Committee also has a stablecoin bill, the STABLE Act, which was passed in May.
There are notable differences between the two chambers’ bills, especially regarding whether stablecoin issuers should be regulated at the state or federal level, and how foreign issuers should be overseen.
Expert Opinions on Stablecoin Regulation
Treasury Secretary Scott Bessent commented this week that successful regulation could propel the US dollar-backed stablecoin market to exceed $2 trillion by 2028. Currently, the stablecoin market’s size is approximately $252 billion, according to CoinGecko.
The vote on the GENIUS Act could radically change stablecoin regulation in the US. Successful implementation of the act will ensure financial stability and enhance trust in stablecoins as an alternative within the financial system.
