U.S. Senate progresses with GENIUS Act, aiming at establishing initial regulations for stablecoin operations.

U.S. Senate progresses with GENIUS Act, aiming at establishing initial regulations for stablecoin operations.

Here's a quick rundown of what's happening with the GENIUS Act, the first comprehensive regulatory framework for stablecoins in the U.S.:

1. Senate Push: Senate Majority Leader John Thune is pushing for a speedy vote on the GENIUS Act, sponsored by Senator Bill Hagerty and co-sponsored by Senators Tim Scott (R-SC) and Cynthia Lummis (R-WY).
2. Bipartisan Support: The bill received strong bipartisan support in the Senate Banking Committee, passing with an 18-6 vote.
3. Presidential Endorsement: Senator Tim Scott, who chairs the National Republican Senatorial Committee, considers the bill a critical step to fulfill President Donald Trump's mandate to advance a regulatory framework for digital assets.
4. Expected Vote: Senator Hagerty expects a full floor vote by the end of April. The Trump administration is aiming to have both the Senate's GENIUS Act and the House's STABLE Bill signed before Congress's August recess.

Differences Between Senate and House Bills

While both bills aim to regulate stablecoins pegged to the U.S. dollar, they differ in several key areas:

1. Reserves: The Senate's GENIUS Act allows money market funds to be used as reserves, whereas the House's STABLE Bill takes a more restrictive approach.
2. Regulatory Approaches: Both bills provide a $10 billion threshold, but the Senate's approach is more lenient for larger issuers, while the House Bill applies uniform standards regardless of issuer size.
3. Algorithmic Stablecoins: The STABLE Bill imposes a two-year moratorium, while the GENIUS Act only requires a brief study.

Opposition and Concerns

Despite the bill's progress, traditional banking advocates argue against the bill, claiming that nonbank stablecoin issuers could create "shadow deposits," posing a threat to consumers and the broader financial system. Critics also argue that the bill could allow Big Tech companies to acquire non-bank stablecoin issuers, potentially disrupting the traditional banking system.

Not all voices within the crypto industry agree on the legislation. Reports suggest that Coinbase, the largest crypto firm in the U.S., is trying to prevent both the GENIUS Act and the STABLE Act from reaching floor votes.

Beyond its immediate impact on stablecoins, the GENIUS Act aims to solidify U.S. dollar dominance in global finance, reflecting concerns about maintaining American financial leadership in a digital global economy.

In essence, the GENIUS Act represents the first major attempt by U.S. lawmakers to create clear rules for the rapidly growing stablecoin sector, which has become a vital part of the cryptocurrency ecosystem in recent years.

Additional Insights:

• The GENIUS Act aims to establish a dual-track system with federal oversight for issuers over $10 billion and state regulation for smaller issuers.
• The STABLE Bill, in contrast, typically sought federal preemption over state frameworks, requiring all issuers to obtain bank charters and adhere to FDIC-like standards.
• The GENIUS Act mandates 1:1 reserves in cash or U.S. Treasuries with monthly attestations for transparency. Larger issuers face stricter capital/liquidity rules.
• The STABLE Bill proposed similar reserve requirements but with no tiered thresholds, applying uniform standards regardless of issuer size.

1. The GENIUS Act, currently under Senate consideration, proposes a regulatory framework for stablecoins, aiming to create a dual-track system with federal oversight for issuers exceeding $10 billion and state regulation for smaller entities.
2. Critics, particularly traditional banking advocates, allegedly express concern that nonbank stablecoin issuers could create "shadow deposits," potentially posing a threat to consumers and the broader financial system.
3. Even within the crypto industry, opposition to the GENIUS Act exists; reports suggest that Coinbase, a major U.S. crypto firm, is attempting to prevent its passage to a floor vote.
4. The GENIUS Act highlights a key distinction from the STABLE Bill, as it allows money market funds to be used as reserves, while the STABLE Bill adopts a more restrictive approach.
5. As technology continues to reshape global finance, the GENIUS Act underscores an effort to solidify U.S. dollar dominance in the digital economy and address the growing importance of stablecoins within the cryptocurrency landscape.

Read also: