The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) is one of the prominent legislative initiatives in the United States to regulate stablecoins at the federal level.
🏛️ Overview of the GENIUS Act
The bill was introduced by Senator Bill Hagerty (Republican from Tennessee) and Kirsten Gillibrand (Democrat from New York), and aims to create a comprehensive regulatory framework for the issuance and regulation of dollar-backed stablecoins.
Key Points of the Bill:
Definition of Stablecoins: The bill defines stablecoins as digital assets designed to be a means of payment or settlement, which the issuer commits to redeem or repurchase at a fixed amount of cash value.
Reserve Requirements: Issuers must maintain reserves equal to 100% of the face value of issued stablecoins, and these reserves must consist of U.S. dollars, insured deposits, short-term Treasury securities, or repurchase agreements backed by Treasury securities.
Regulatory Responsibility: The responsibility for regulating and supervising issuers is assigned either at the federal level or at the state level, depending on the size of the issuer and the scope of its operations.
Ban on Algorithmic Stablecoins: The bill explicitly prohibits the issuance or creation of any digital asset designed to maintain a relatively stable value using algorithms to adjust supply in response to market demand fluctuations, in order to avoid a repeat of the Terra/Luna collapse.
Ban on Major Companies: The bill prohibits major companies such as Meta, Google, and X from issuing stablecoins, preventing large corporations from creating their own digital currencies.
