Hello everyone, I am Bear. Today, let's briefly discuss the new regulations on cryptocurrency.
Recently, the United States has introduced many new regulations regarding cryptocurrency, especially the bill called GENIUS, which presents both opportunities and challenges for the crypto industry. Let’s explain how to respond in simple terms.
First, let’s talk about compliance, which stablecoin issuers need to pay special attention to. Just like opening a restaurant requires a business license, issuing stablecoins also requires qualifications. Companies like Circle, which are compliant, have ensured that for every dollar of stablecoin issued, there is a dollar in reserve through partnerships with banks. Non-compliant companies must quickly adjust within the stipulated time, either by relocating to the United States or changing the structure of their reserves.
Reserves must also be public and transparent, just like supermarkets inventory their goods daily. Stablecoin issuers should calculate their reserves every month and inform everyone. An automated management system should also be in place to allow for real-time checks to avoid discrepancies between cash and accounts.
Additionally, different cryptocurrency assets will be managed by different departments in the future. For instance, Bitcoin may fall under the CFTC, while some platform tokens may be governed by the SEC, just like different commodities are managed by different market regulatory departments. Projects in DeFi should avoid excessive centralization of power and allow more participation in decision-making, which may reduce the burden of responsibility.
Now let's talk about how to seize opportunities. Traditional financial institutions, such as banks and VISA, can also compliantly issue stablecoins now, which opens up a large market. Crypto companies can collaborate with them to issue stablecoins, leveraging their customer base to expand business. Stablecoins can also be used for payments in cross-border trade and supply chain scenarios, with lower fees and faster transactions, potentially capturing a significant amount of business.
The bill requires stablecoin issuers to purchase US Treasury bonds, which is not a bad thing. Investing part of the reserves in short-term Treasury bonds can comply with regulations while earning some interest. However, attention must also be paid to the price fluctuations of Treasury bonds; just like stock trading requires setting stop-loss orders, there must be a way to cope with this.
Technically, we need to make reserve assets more transparent. For example, putting US Treasury bonds on the blockchain so that we can see their value at any time and whether they are sufficient. We can also implement smart contracts to automatically handle reserve adjustments and redemptions, minimizing human intervention and reducing errors. At the same time, we must ensure that personal information is not leaked during transactions while complying with anti-money laundering requirements, similar to how courier services protect privacy but still require real-name registration.
Internationally, different places have different rules, allowing for flexible arrangements. For example, the regulations in Hong Kong are suitable for issuing non-USD stablecoins, while Singapore is more lenient towards innovative projects. It is also necessary to cooperate well with regulatory bodies in other regions and mutually recognize audit results, which can significantly reduce business costs and prevent financial issues.
Lastly, we need to talk about risk prevention. We must consider what to do if everyone wants to redeem their stablecoins; we need to ensure that reserves can quickly be converted to cash, just like banks need to maintain enough funds to handle withdrawals. Insurance can also be purchased, so in case of problems, some money can be compensated, giving everyone more peace of mind.
We must constantly monitor policy changes, join industry associations, and participate more in policy formulation, rather than waiting until rules are set in stone before being caught off guard. Establishing a dedicated team that is always ready to adjust business strategies will help maintain stability amidst changes.
