#StablecoinLaw
The US Congress is advancing stablecoin legislation through two similar bills: the STABLE Act and the GENIUS Act. Both bills aim to establish a regulatory framework for stablecoins, but they differ in key details.
*Key Provisions:*
- *Regulatory Framework*: Both bills allow payment stablecoins to be issued by subsidiaries of insured depository institutions, entities approved by the Office of the Comptroller of the Currency (OCC), and entities authorized under qualifying state regimes.
- *Reserve Requirements*: Stablecoin issuers must maintain 1:1 backing for all outstanding stablecoins, with acceptable reserve assets including cash deposits, US Treasury bills, and central bank reserves.
- *Custody Requirements*: Custodial intermediaries must segregate customer assets, maintain separate accounting systems, and prevent commingling of customer and corporate assets.
- *Enforcement*: Regulators can revoke registration, pursue cease-and-desist proceedings, remove institution-affiliated parties, and impose civil money penalties.
*Differences between STABLE Act and GENIUS Act:*
- *Federal vs. State Authority*: The STABLE Act creates a more centralized framework with broader federal preemption, while the GENIUS Act maintains greater state regulatory authority.
- *Threshold for Federal Oversight*: The GENIUS Act includes a $10 billion threshold above which state-chartered issuers must transition to federal supervision.
- *Algorithmic Stablecoins*: The STABLE Act imposes a two-year moratorium on new algorithmic stablecoins, while the GENIUS Act directs the Treasury to study algorithmic stablecoins ¹ ².
*Impact on Stablecoin Issuers:*
- *Circle and Paxos*: Companies like Circle (USDC) and Paxos (PYUSD) are well-positioned to benefit from the legislation due to their existing compliance and regulatory infrastructure.
- *Tether*: Tether (USDT) faces significant challenges due to its offshore structure and opaque reserve practices, which conflict with the legislation's requirements
