The U.S. Senate passes the GENIUS Act, paving the way for stablecoin regulation

The U.S. Senate recently passed the GENIUS Act, establishing a clear federal regulatory framework for U.S. dollar-backed cryptocurrencies (i.e., stablecoins). The bill will next be submitted for approval by the House of Representatives and the President, and if it passes smoothly, it will come into effect.

Key Points of the GENIUS Act

The bill aims to establish a federal framework for the issuance of dollar-backed stablecoins, with key provisions including:

1. Full asset backing: Each stablecoin must be fully backed by high-quality, liquid reserve assets, such as cash in USD, insured bank deposits, short-term U.S. Treasury securities, etc. The issuer must hold at least one dollar of compliant reserves for each stablecoin.

2. Tiered Regulation: Different regulatory strategies are applied based on the issuance scale. Large issuers of stablecoins exceeding $10 billion are subject to federal regulation; smaller issuers may opt for state-level regulation.

3. Prohibition of Algorithmic Stablecoins: Explicitly prohibit "algorithmic stablecoins" that rely on programs or internal cryptocurrencies to maintain value.

4. Prohibition on Providing Returns: Payment stablecoins shall not pay interest, dividends, or any form of returns to holders.

5. Non-securities or commodities: Clearly compliant payment-type stablecoins do not fall under the category of securities or commodities, resolving the uncertainty of regulatory classification.

6. Bankruptcy Protection: In the event of bankruptcy, the claims of stablecoin holders take precedence over other creditors.

The Importance of the Bill

Stablecoins have become an increasingly critical infrastructure in global financial activities. Currently, the total market capitalization of stablecoins exceeds $250 billion, with an annual trading volume of over $30 trillion and the number of active addresses reaching 261 million.

The interest of enterprises in stablecoins is growing increasingly. A survey shows that 81% of small and medium-sized enterprises that are familiar with cryptocurrencies are interested in using stablecoins. The number of large enterprises planning to adopt or explore stablecoins has more than tripled compared to last year.

The adoption of stablecoins in emerging markets is also accelerating. In regions with significant currency fluctuations, stablecoins provide an alternative option. Latin America and Sub-Saharan Africa are at the forefront of retail and professional-grade stablecoin transfers globally, with an annual growth rate exceeding 40%.

The EU, Singapore, and Hong Kong have made clear progress in regulating stablecoins. The U.S. has been hindered by political disagreements and has yet to introduce clear policies. The passage of the GENIUS Act in the Senate may break this deadlock.

Potential Impact on the Market

1. Regulated stablecoin issuers will benefit from regulatory legitimacy, opening the door for compliant institutional capital to flow into the on-chain payment space.

2. Unregulated issuers of stablecoins that provide illegal coin support or promise returns may exit the U.S. market.

3. The era of regulatory arbitrage for offshore stablecoins may come to an end. Offshore issuers not registered in the United States may face challenges.

4. Financial technology companies may accelerate their layout in the stablecoin field, but large technology companies will face strict compliance requirements when issuing stablecoins.

Future Outlook

1. House Review: The bill will enter the review stage in the House of Representatives, where amendments may be proposed.

2. Formulation of regulatory rules: Relevant regulatory agencies need to further develop specific rules regarding capital adequacy, liquidity, risk management, and so on.

3. State Trends: The specific measures taken by each state under this regulation are also worth paying attention to.

The clarification of stablecoin regulation will bring more opportunities and challenges to the cryptocurrency market, driving the industry towards a more standardized and mainstream direction.