The "GENIUS Act" has recently been signed into law in the US, establishing a regulatory framework for payment stablecoins. Here's a shorter summary of key aspects:
Stablecoin Law (GENIUS Act):
Purpose: To regulate payment stablecoins, provide consumer protection, and foster responsible innovation, aiming to strengthen the US dollar's global position.
Definition: Defines "payment stablecoins" as digital assets used for payments/settlement, redeemable for a fixed monetary value, and designed to maintain a stable value (often pegged to the US dollar).
Issuance: Permits issuance by "Permitted Stablecoin Issuers," including subsidiaries of insured depository institutions or qualified non-bank entities, either federally or state-regulated.
Key Requirements:
1:1 Backing: Requires stablecoins to be fully backed (1:1) by high-quality, liquid reserve assets (e.g., cash, short-term US Treasury bills, Federal Reserve deposits).
Reserve Disclosure: Mandates public disclosure of reserve composition and redemption policies on a monthly basis.
Anti-Money Laundering (AML): Subjects issuers to robust AML, customer due diligence (KYC), and transaction monitoring requirements.
No Interest Payments: Prohibits offering interest or yield on stablecoin holdings.
Redemption Policy: Requires clear procedures for timely redemption of stablecoins for fiat, with disclosed and capped fees.
Prohibitions: Bans members of Congress and their families from profiting off stablecoins (though this currently excludes the President and his family). Prohibits unauthorized stablecoins from being offered or sold in the US after a three-year grace period.
Dual Framework: Establishes both federal and state regulatory pathways, allowing smaller issuers (under $10 billion outstanding) to opt for state regulation if it's "substantially similar" to the federal framework.
Global Impact: Aims to attract stablecoin activity to the US and restricts foreign-issued stablecoins unless they comply with the new framework.
