The US Senate has recently made a significant move towards federal regulation of stablecoins with the passing of the GENIUS Act. This landmark bill, introduced by Republican Senator Bill Hagerty, marks a pivotal moment in the cryptocurrency industry and has sparked discussions in the House of Representatives regarding the future of digital assets.
The GENIUS Act, which garnered support from some Democratic senators, is the first major piece of legislation in US history specifically addressing cryptocurrencies. Senator Hagerty expressed his gratitude to fellow senators who backed the bill, which successfully passed the final vote after weeks of committee deliberations and procedural votes. This victory comes after a setback last month when Democrats withdrew their support, highlighting the complexities surrounding cryptocurrency regulation.
One of the key provisions of the GENIUS Act is the requirement for stablecoins to be fully backed by US dollars or similar liquid assets. Additionally, stablecoin issuers with a market value exceeding $50 billion will be subject to annual audits to ensure compliance with the law. Foreign issuers will also be subject to regulations under this new legislation.
The law imposes strict guidelines on large publicly traded companies, such as Meta and Amazon, prohibiting them from issuing stablecoins unless they meet specific criteria related to financial risk and user data privacy. Furthermore, the GENIUS Act includes a provision granting “bankruptcy priority” to stablecoin owners, ensuring they have priority in recovering their funds in the event of a bankruptcy, akin to the protection afforded to traditional bank depositors.
It is important to note that the information provided in this article is not intended as investment advice, but rather as a summary of the recent developments in cryptocurrency regulation. The passage of the GENIUS Act represents a significant step towards creating a clear legal framework for cryptocurrencies in the United States, paving the way for further discussions and regulations in the evolving digital asset landscape.