The US has passed its first federal stablecoin law, known as the GENIUS Act, which aims to regulate stablecoins and provide a comprehensive framework for their use. Here's what you need to know ¹ ²:
- *Key Provisions*:
- *1:1 Reserve Requirement*: Stablecoin issuers must hold equivalent reserves in cash or short-term Treasury bills to back their coins.
- *Monthly Transparency Disclosures*: Issuers must disclose their holdings every month to ensure transparency.
- *Ban on Algorithmic Stablecoins*: The law outlaws unbacked algorithmic stablecoins to prevent another Terra-like collapse.
- *Strict Anti-Money Laundering Rules*: The law requires compliance with anti-money laundering and consumer protection rules.
- *Effective Date*: The law is expected to take effect 18 months after enactment or 120 days after federal agencies finalize rules.
- *Regulatory Framework*: The law establishes a dual supervision system, with the OCC as the default regulator for federal qualified payment stablecoin issuers, and state regulators overseeing issuers with less than $10 billion in outstanding issuance.
- *Impact*: The law is expected to boost the market for stablecoins, which currently stands at $238 billion, with projections it could hit $2 trillion under this new structure.
The GENIUS Act has received bipartisan support, with 308 votes in favor and 122 against in the House, and 68 votes in favor and 30 against in the Senate. President Trump is expected to sign the bill into law ¹ ³.
