GENIUS Act: A Safeguard or a Stumbling Block for Stablecoins?
Today in the crypto world, discussions about the GENIUS stablecoin act are fervent.
The passage of the act signifies that the crypto industry may usher in a more compliant future, but it also brings pressure that small projects and decentralized stablecoins may hesitate to voice.
1. GENIUS Act: A Double-Edged Sword of Compliance
This act indeed brings higher legitimacy to stablecoins, particularly in terms of consumer protection, such as 1:1 reserve requirements and bankruptcy priority, which may encourage more institutional investors to enter the market and improve the acceptance of stablecoins in mainstream finance.
However, this seemingly perfect compliance framework may not be as glamorous as it appears. For small projects, compliance costs are clearly a huge burden. Especially in a market exceeding $10 billion, projects must shift to federal regulation, which undoubtedly increases pressure on small issuers.
2. The Future of Decentralized Stablecoins is at Risk
The clear definition and regulatory requirements for payment stablecoins in the act also trigger dilemmas for decentralized stablecoins. The existence of decentralized stablecoins like DAI may face greater regulatory barriers in the future. Will there be a situation where only licensed banks can issue stablecoins? If so, this would severely restrict the development of decentralized stablecoins.
Behind this policy, the deeper reason is the pressure from banks and traditional financial interest groups, which may limit innovation and the spirit of decentralization.
3. Over-Regulation, a Constraint on Innovation
Although on the surface, the GENIUS Act may bring compliance benefits, for small projects, if regulation is too strict, it could lead to industry centralization, forcing many innovative small projects out of the market, which may actually represent the true future of the crypto space.
In the long run, the essence of a decentralized and open industry may be threatened.
4. My Opinion
I believe that the GENIUS Act is a step towards maturity for the crypto industry, but its implementation details will directly determine the future direction of the industry. If the act can take into account innovation and the space for decentralization during its execution, it may become a driving force for the industry’s development.
