The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) is the first comprehensive federal law to regulate U.S. dollar–backed stablecoins. It outlines clear rules for who can issue stablecoins, how they must be backed, and what compliance standards they must meet.
Stablecoins are a type of cryptocurrency designed to maintain a stable value, typically by being pegged to a reserve asset like the U.S. dollar, euro, or gold.
Key Characteristics:
-
Price Stability: Stablecoins aim to keep their value steady (e.g., 1 stablecoin = $1).
-
Reserve-Backed: Most are backed by assets such as:
-
Used for Payments & Trading: Common in digital payments, crypto trading, lending, and DeFi apps as a way to avoid volatility.
Why Stablecoins Matter:
-
Enable fast, low-cost transactions globally
-
Used in cross-border remittances
-
Serve as a stable store of value in unstable economies
Key Provisions of the Genius Act:
-
Only federally approved banks, licensed nonbanks, and eligible state-regulated entities can issue stablecoins.
-
All stablecoins must be backed 1:1 by liquid reserve assets, with monthly public disclosures of those reserves.
-
In a bankruptcy, stablecoin holders have priority claims on reserve assets.
-
Issuers must comply with the Bank Secrecy Act, including anti-money laundering, sanctions monitoring, and the ability to freeze suspicious wallets.
-
Federal and state regulators will share oversight, but federal authorities can intervene under specific circumstances.
-
Foreign stablecoin issuers face restrictions to protect U.S. financial interests.
-
The law is designed to maintain U.S. dollar dominance and protect national security.
Why the GENIUSD Act Matters:
-
Provides regulatory clarity to the growing $260 billion stablecoin market.
-
Opens the door for traditional banks to issue compliant stablecoins.
-
Sets consumer protection standards to ensure stability and transparency.
-
Positions the U.S. as a global leader in digital asset regulation.
Feed from Forexlive.com