Mastercard has described the newly signed GENIUS Act as a turning point in the control of stablecoins.
The international financial institution thinks that the legislation will introduce institutional legitimacy and make the consequences of digital asset adoption more transparent and secure.
Support from Mastercard and Institutional Players
Mastercard claimed that preparing a regulatory change of this magnitude has been years in the making. The company has collaborated with crypto businesses and conventional banks to analyze how stablecoins’ usage can enhance payment networks. It asserts that its digital infrastructure investments and collaborations have placed it in a relatively good position to promote the secure introduction of stablecoins.
The company identified its Mastercard Multi-Token Network and Mastercard Crypto Credential platforms as essential mechanisms for settling stablecoin transactions. All these platforms were created to enhance security and compliance and maintain the flexibility of features that make stablecoins appealing.
Mastercard’s global policy lead, Jesse McWaters, has stated that stablecoins will not become mainstream until prominent and previously trustworthy institutions become accustomed to them. In his opinion, the GENIUS Act can help in that direction.
GENIUS Act Opens Stablecoin Market to Banks and Corporations
The new law states that stablecoins must be issued by licensed corporations or banks, which must undergo strict criteria. These include carrying reserves, making disclosures, and complying with federal regulations. Under the act, these entities will be able to issue stablecoins pegged to US dollars.
Proponents note that the act introduces legal certainty into the space. Summer Mersinger, the chief executive officer of the Blockchain Association, commended the law because of its emphasis on consumer protection and innovation. He said it makes the US dollar more effective in the emerging digital economy.
Big companies such as Amazon or Apple are examining the possibility of investing in stablecoins. JPMorgan, Citigroup, and Bank of America executives have expressed interest in the same. It is also reported that certain US banks have discussed initiating joint stablecoins with Zelle.
Concerns Over Consumer Risk and Market Fragmentation
It has not received all positive comments. Critics say that the law can compromise consumer protection by exchanging insured deposits with digital coins. The Consumer Federation of America’s Corey Frayer alerted that stablecoins do not have interest payments or government protection.
The other fear is that stablecoins will not cut operating costs and might divide the payments area. Having more than one coin in circulation could hamper customers’ ease of payment. Opponents argue that the possibility and need to create wallets may add to the level of security.
There have also been wary remarks regarding the Trump family’s connection to companies like World Liberty Financial, which has allegedly earned over $500 million.
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