US Stablecoin Bill
Legislative Status:
The GENIUS Act, introduced by Senators Bill Hagerty (R-TN) and Kirsten Gillibrand (D-NY), aims to establish a regulatory framework for payment stablecoins. The bill passed the Senate Banking Committee with an 18–6 vote in March, indicating initial bipartisan support.
However, recent developments have disrupted its progress. Nine Senate Democrats, who previously supported the bill, have withdrawn their backing. They cite concerns over inadequate provisions related to anti-money laundering, national security, and consumer protections.
Political Opposition:
The withdrawal of support from key Democrats has created a significant hurdle for the bill's advancement. Senate Majority Leader Chuck Schumer has advised caution, encouraging further revisions to address the highlighted issues.
Additionally, controversies surrounding World Liberty Financial, a cryptocurrency firm associated with former President Donald Trump, have intensified scrutiny. The firm's recent $2 billion deal involving stablecoins has raised ethical concerns among lawmakers about potential conflicts of interest.
Key Provisions of the GENIUS Act:
Definition of Payment Stablecoins: Digital assets used for payments or settlements, redeemable for a fixed dollar value, and backed 1:1 by reserves like U.S. dollars or Treasury bills.
Issuer Requirements: Stablecoin issuers must maintain fully backed reserves, segregate operational funds, and comply with monthly certification and capital requirements.
Regulatory Oversight: The bill proposes a dual regulatory approach, allowing state-regulated issuers with assets up to $10 billion, provided state regulations align with federal standards.
Transparency and Compliance: Issuers are required to publish monthly liquidity reports and comply with legal orders to freeze transactions, enhancing transparency and enforcement.
