On June 17, the U.S. Senate voted in favor of the GENIUS Act, which creates the first federal framework for dollar-pegged stablecoins.
Overview of GENIUS Act
The GENIUS Act was passed with a 68-30 vote, establishing necessary guidelines for dollar-backed stablecoins. The legislation mandates that stablecoin issuers hold 100% of reserves in liquid assets and report reserve compositions monthly. It addresses two major stablecoins: Tether's USDT with a market cap of $155 billion and Circle's USDC with a market cap of $61.6 billion.
The Role of XRP in the Stablecoin System
Analysts warn that while stablecoins offer advantages, they cannot address all international payment challenges. XRP is seen as a neutral 'bridge asset' capable of providing stable liquidity. The ability to transfer value directly through XRP allows for faster transactions and minimizes counterparty risk.
Regulatory Clarity and Liquidity Needs
While the GENIUS Act ensures reserve transparency and issuer responsibility, it does not tackle cross-border liquidity challenges. XRP could become an essential part of the system due to its on-demand liquidity model, enabling banks and stablecoin issuers to adapt to the new regulations.
The GENIUS Act could be a significant step toward developing the stablecoin market in the U.S., but XRP's role as a liquidity bridge remains critical given the existing international payment challenges.
