On June 17, the U.S. Senate approved the GENIUS Act, marking the first significant step in regulating the crypto sector, particularly stablecoins used for payments.
Core Provisions of the GENIUS Act
The GENIUS Act establishes clear rules for stablecoin issuers, requiring their digital currencies to be backed by U.S. dollars or equivalent liquid assets. Issuers with a market capitalization exceeding $50 billion must undergo annual audits, and foreign issuers must meet similar standards. The act also grants crypto holders 'super-priority creditor' status should an issuer face bankruptcy.
Who Faces Restrictions and Why?
The act introduces restrictions for public companies such as Meta and Amazon on issuing stablecoins unless they adhere to established financial risk management and consumer privacy standards. This reflects ongoing pressure from traditional financial entities aimed at limiting the influence of non-bank institutions on the stablecoin market.
Prospects for Further Regulation
As the debate continues, the House of Representatives faces pressure to incorporate the GENIUS Act into its existing stablecoin legislation or potentially align it with a broader market regulation framework. Trump's support for the act creates momentum for aligning legislative priorities across chambers by August.
The GENIUS Act reflects a growing bipartisan recognition of the need to regulate digital currencies while safeguarding the interests of both issuers and consumers. The act's future could usher in a new era of oversight in the cryptocurrency market, balancing innovation with security.
