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The GENIUS Act Prevents Big Tech Companies And Banks From Dominating Stablecoins: Circle CEO
Circle's Dante Disparte said the GENIUS Act ensures that tech corporations and banks cannot dominate the stablecoin market without facing strict structural and regulatory barriers.
“The GENIUS Act has what I want to call — just for my own benefit — a Libra provision,” Disparte told the Unchained podcast on Saturday. Any non-bank organization that wants to issue dollar-pegged tokens must establish “an independent entity resembling Circle rather than a bank,” overcoming antitrust barriers and facing a Treasury Department committee with veto power over the launch.
Banks are not exempt either. Lenders issuing stablecoins must store it in a legally separate subsidiary and keep this money on the balance sheet "without accepting risk, without leverage, without lending," Disparte noted.
That structure is even "more conservative" compared to the deposit token model that JPMorgan and other companies have implemented. "It creates clear rules that I think ultimately benefit American consumers, market participants, and frankly, it is the dollar," he added.
Circle's Dante Disparte on Unchained. Source: Laura Shin
The GENIUS Act Passed With Bipartisan Support
Passed last week with over 300 votes in the House of Representatives, including support from 102 Democrats, the National Stablecoin Innovation Act (GENIUS) grants the dollar "rule-based" power in the global digital currency race, Disparte argued.
He said, “Ultimately, cryptocurrency has achieved what it wanted: legitimacy, a path towards legal and regulatory clarity in the U.S., and a competitive opportunity.”
This bill maintains the patchwork of state money transmission laws for issuers under the $10 billion threshold but requires a national trust bank charter when assets exceed that threshold.
Notably, this law prohibits yield-bearing stablecoins, promotes stringent disclosure standards, and imposes criminal penalties on unsecured "stable" tokens. Disparte mentioned that Terra-style experiments have "disappeared."
However, critics argue that the yield ban could hinder consumer acceptance and create an advantage for foreign issuers. Disparte argues that yield "is an improvement in the secondary market" better deployed by decentralized financial protocols when the platform is solid.
DeFi Gains An Advantage As GENIUS Bans Yield
The ban on yield-bearing stablecoins in the GENIUS Act could redirect investor demand towards decentralized financial (DeFi) platforms based on Ethereum.
According to analysts like Nic Puckrin and Christopher Perkins of CoinFund, with no more interest rate incentives from stablecoins, DeFi becomes the primary option for generating passive income on-chain, with those predicting that the "stablecoin summer" could now evolve into a "DeFi summer."
This ban is particularly important for institutional investors. Unlike individual users, financial institutions have a fiduciary duty to generate profits, making yield opportunities essential. Analysts suggest this could lead to an increase in institutional capital flowing into DeFi, particularly Ethereum, which dominates the total value locked in the space
