The U.S. Senate recently passed the bill known as the GENIUS Stablecoin Act. This marks a significant milestone for the cryptocurrency world. The full name of the bill is 'Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 Act' (GENIUS Act).
Here are some key features of this bill:
It creates a legal framework for regulating cryptocurrencies known as 'Stablecoins' that are pegged to stable assets like the U.S. dollar.
Its main goals are to bring long-awaited regulatory clarity to the crypto space, enhance consumer protection, and position the U.S. as a leader in financial innovation.
Full reserve backing (1:1 backing): Stablecoin issuers must be fully backed by liquid assets such as U.S. dollars or short-term Treasury bills.
Issuers must publicly disclose information about the composition of reserves on a monthly basis.
Regulatory Oversight: Issuers of Stablecoins will need licenses at the federal or state level. Additionally, they must adhere to audit and Anti-Money Laundering (AML) regulations.
Prohibition on interest-earning Stablecoins: Issuers of Stablecoins are prohibited from providing interest or yield on Stablecoins.
Consumer Protection: If an issuer becomes insolvent, holders of Stablecoins will have priority over other creditors regarding the reserves.
Disclosure for Officials: Congressional members and executive branch officials holding more than $5,000 in Stablecoins must disclose it.
The GENIUS Act bill was passed in the U.S. Senate by a vote of 68-30.
This is a bipartisan bill, although some Democrats opposed it.
After being passed in the Senate, this bill will now be sent to the House of Representatives. The House may approve, amend, or reject it. The House also has its own Stablecoin bill called the 'STABLE Act.' Therefore, there may be negotiations or compromises between the two chambers.
If this bill becomes law, it will provide the long-awaited regulatory clarity to the Stablecoin market.
Supporters believe this will position the U.S. as the center of cryptocurrency innovations and strengthen the global dominance of the U.S. dollar.
It is said that Stablecoins can be used for fast and cheap payment transfers, marking a 'paradigm shift' in the financial system.
However, some critics argue that it does not fully address concerns regarding financial stability, banking financial models, and privacy.
Overall, the GENIUS Act represents a significant step in shaping the future of cryptocurrency, particularly Stablecoins, in the U.S.
Source - Google Gemini
