The U.S. Congress has introduced two bills aimed at regulating stable digital currencies. These proposed laws could impact companies operating in this area.
Bill Provisions and Requirements
The GENIUS Act, led by Senator Bill Hagerty, requires companies to maintain a 100% reserve and utilize a U.S.-based accounting firm to issue stable assets. A similar bill, the STABLE Act, was introduced in the House of Representatives. Both pieces of legislation aim to restrict operations of companies that do not meet the established criteria in the U.S. market.
Oversight and Market Risks
Tether provides periodic status reports instead of regular audit reports, raising various concerns among market participants. U.S. exchanges may impose trading restrictions on Tether to assess regulatory risks. In contrast, Tether’s competitor, USDC, is known for its regular audits and disclosures.
Consequences for the Industry
Tether CEO Paolo Ardoino remarked that major auditing firms prioritize the banking sector, leading his company to prefer not to be audited. Ardoino’s statement emerged during a time of increased discussion on auditing and collaboration within the industry. It may take months for these bills to become law. The regulations that result could influence the risk management strategies of exchanges. The compliance process for affected companies could enhance market trust and transparency.
While congressional proposals lead to broad discussions and evaluations, changes in the approaches of industry participants and stakeholders are expected.
