#StablecoinLaw Stablecoin Laws and Regulations
Stablecoins are getting a lot of regulatory attention globally, and the US has just passed a landmark law. The *GENIUS Act* (Guiding and Establishing National Innovation for U.S. Stablecoins) establishes a federal framework for stablecoins, requiring issuers to maintain 1:1 reserves with liquid assets like US dollars or Treasury securities ¹ ².
Key Provisions of the GENIUS Act
- *Reserve Requirements*: Stablecoins must be fully backed by liquid assets.
- *Audits and Compliance*: Issuers must publish monthly reserve reports and undergo regular audits.
- *Ban on Algorithmic Stablecoins*: Unbacked algorithmic stablecoins are outlawed to prevent collapses like TerraUSD.
- *Licensing Tiers*: Issuers with under $10 billion in stablecoins can seek state-level licenses; larger entities require federal oversight.
Global Regulatory Landscape
- The *European Union's MiCA* regulation mandates authorization for stablecoin issuers and strict capital requirements.
- *Hong Kong* has passed a licensing framework for fiat-referenced stablecoin issuers.
Impact of Stablecoin Regulations
Regulatory clarity is expected to:
- *Enhance Market Stability*: By ensuring stablecoins are backed by liquid reserves.
- *Foster Institutional Adoption*: Clear guidelines encourage traditional financial entities to explore stablecoins ³.
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