Observations and personal views from Nothing Research Partner 0x_Todd; the following content does not constitute any investment advice.
If the US stablecoin bill (GENIUS Act) passes smoothly, its significance will be tremendous; I even think it could enter the top five in Crypto history.
Although abbreviated as the GENIUS Act, which translates directly to the Genius Act, it actually stands for Guiding and Establishing National Innovation for U.S. Stablecoins, which translates to 'Guiding and Establishing National Innovation for U.S. Stablecoins.'
The proposal is lengthy, let me summarize a few highlights for everyone:
1. Mandatory 1:1 sufficient assets: the scope includes cash, demand deposits in banks, and short-term US government bonds. At the same time, misappropriation and re-pledging are strictly prohibited.
2. High-frequency information disclosure: publish a reserve report at least once a month, introducing external audits.
3. Issuance of licenses: Once the circulating market value of an issuer's stablecoin exceeds $10 billion, they must transition into the federal regulatory system within the specified time frame and adopt banking-level regulation.
4. Introduce custodianship: Custodians of stablecoins and their reserve assets must be regulated qualified financial institutions.
5. Clearly define as a payment medium: The bill clearly defines stablecoins as a new type of payment medium, primarily subject to banking regulatory systems, rather than being constrained by securities or commodity regulatory systems.
6. Bring existing stablecoins into compliance: a maximum 18-month buffer after the bill takes effect, aimed at urging existing stablecoin issuers (like USDT, USDC, etc.) to obtain licenses or come into compliance as soon as possible.
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The main text is over; let me take the opportunity to talk about the significance of this matter with excitement.
Over the years, when others ask what applications you in the Crypto industry have created over 16 years?
In the future, you can confidently tell others — stablecoins.
First, clearing concerns is a prerequisite.
Some people once held opposing views; in the past, people's impression of stablecoins was — an opaque black box. Every few months, there would be a FUD, either Tether's assets were frozen or Circle had a huge hole in its losses.
In fact, if you think about it, Tether easily earns tens of billions of dollars a year just from the interest on those underlying government bonds. Circle made a slightly less profit of 1.7 billion dollars last year.
This is a way to earn money while standing; from a motivational perspective, they have no malicious intent, rather they are the ones most eager for compliance.
Now, this opaque black box will turn into a transparent white box.
In the past, the only criticism was that Tether's funds might be frozen by the US; now, they are directly placed in a US-compliant custodial institution, with high-frequency information disclosure, which can be fully trusted.
【Don't worry about running away】 is such a huge advantage — I think especially all Crypto people understand.
Second, mastering the standards is crucial.
Stablecoins were once on the verge of having their victory snatched away by CBDCs. In any country, if there really is a central bank digital currency, it is very likely not built on blockchain, at most built on some internal alliance chain of the central bank, which honestly has no real significance.
When CBDCs were at their peak, it was also the most dangerous time for stablecoins.
If CBDCs had succeeded back then, stablecoins would now be suppressed into dark corners, and blockchain would only play a minimal role.
And the remaining half-dead stablecoins would even have to learn the standards of central bank digital currencies, completely losing the right to speak on standards.
And now, stablecoins have won (about to).
Everyone should instead learn the standard of [Blockchain + Token].
Now many blockchains actually don't have any meaningful applications on them, except for stablecoin transfers. For example, on Aptos, the only scenario I use Aptos for is transferring between Binance and OKX.
And now, stablecoins will be legislated; what does this mean?
That's right, blockchain will become the only standard.
In the future, every user of stablecoins must learn to use a wallet.
As a side note, I think Ethereum's strong promotion of EIP-7702 is indeed somewhat forward-looking. While other chains are frantically creating memes, thanks to Ethereum for still insisting on account abstraction.
EIP-7702 is account abstraction, which can support things like:
Register social media account wallet
Use local currency to pay for GAS
And so on
This solves the last mile for a large number of new users using stablecoins in the future.
Third, deposits enter a new era.
Moreover, once stablecoins receive legislative support, deposits and withdrawals will become much simpler.
Let's imagine a scenario: previously, due to the gray nature of stablecoins, it was impossible, but after the bill passes, many traditional brokerages can support stablecoins themselves. The money of US stock investors can turn into stablecoins in an instant, and then directly stuffed into Coinbase in a second. Do you believe it?
Let's imagine a scenario: if the Genius Act smoothly passes through the House of Representatives, then you will see:
Because the profits from this trade are too rich, existing stablecoin leaders and newly entering traditional giants have started promoting their stablecoin products madly.
And an outsider, because of these promotions, started using stablecoins. Then one day realized, since the wallet accounts have been created, is it very difficult to understand the Bitcoin inside?
Stablecoins are a huge Trojan horse; the moment you start using stablecoins, you have unknowingly stepped half a foot into the Crypto world.
Fourth, finally
As a massive reservoir to absorb US debt, although stablecoins cannot directly convert debt, they at least provide ammunition for the secondary market of US debt. These functions are quite important, and slowly, stablecoins have become part of the US debt market's body. Therefore, once the US legislates, after tasting this sweetness, it will be impossible to go back and cancel it.
Moreover, we are also confident that stablecoins are indeed one of the great innovations in our industry; once someone has used stablecoins, it is very difficult to return to the traditional cash-bank system.
The bill cannot go back, and users cannot go back either. In the future, concerns will soon be cleared, standards will be mastered, and the era of large deposits seems to be imminent.