What the U.S. Genius Act Means for the Cryptoassets Industry | CoinDesk JAPAN

• The "GENIUS" law, signed by President Trump and enacted as law, establishes a regulatory framework for stablecoins in the United States.
• This law grants supervisory authority over stablecoin issuers to the Federal Reserve Board (FRB) and the Office of the Comptroller of the Currency (OCC).
• The Genius Law aims to clarify the regulation of stablecoins, which could promote the mainstream adoption of stablecoins and support financial innovation.

"The 'National Innovation Leadership and Establishment Act for Stablecoins in the United States: GENIUS Act' was enacted on July 18, when President Donald Trump signed it, becoming the first major law in the United States concerning digital assets."

This is a groundbreaking law for the digital asset industry, which has been eagerly awaiting regulatory clarity for many years. However, specifically, what kind of law is it?

The "Genius Bill" submitted in the Senate aims to establish a regulatory framework to accommodate stablecoins, which are cryptoassets (virtual currencies) linked to the value of other assets (usually the US dollar).

The dollar-pegged stablecoin industry, boasting a market capitalization of $267 billion (approximately 40 trillion yen, based on an exchange rate of 1 dollar = 149 yen), is dominated by Tether and Circle, primarily serving as an intermediary asset for transactions or as a means of accessing the US dollar in countries facing hyperinflation and other currency issues.

The Genius Act defines the payment method using stablecoins. The Act assigns the task of overseeing the issuance of stablecoins to the two main banking regulators in the United States, the Federal Reserve Board (FRB) and the Office of the Comptroller of the Currency (OCC).

The FRB supervises major banks that issue stablecoins, while the OCC supervises non-bank entities that issue stablecoins exceeding $10 billion.

Even companies with an issuance amount exceeding 10 billion dollars can be supervised by state regulators if they meet certain criteria and obtain an exemption.

The Genius Act also defines the reserve requirements for stablecoins and mandates that issuing companies regularly disclose information regarding their reserves. The reserves themselves must consist of U.S. dollars, demand deposits, U.S. Treasury securities, and other "approved assets."

Why is it important?

Some observers point out that this law may clarify the regulatory framework for using stablecoins in everyday financial transactions, which is good news for cryptoassets companies and consumers.

"This law empowers American companies and consumers, allowing them to harness the next stage of financial innovation," said Democratic Senator Kirsten Gillibrand, who has been a long-time proponent of stablecoin legislation.

This law has the potential to promote the penetration of cryptoassets among the general public and accelerate further innovation in financial systems utilizing blockchain technology.

"This new stablecoin legislation will innovate how value moves around the world, expand access to the financial system, and help realize technologies that unlock new economic opportunities for millions of people. We are only catching a glimpse of a tiny fraction of the possibilities," said Avery Ching, co-founder and CEO of Aptos Labs.

Another point that may help justify the digital asset revolution is that, from the perspective of anti-money laundering regulations, it treats stablecoin issuing companies as financial institutions and establishes the requirements for customer data that these companies must collect and verify.

This aligns with the efforts of some cryptoasset companies aiming to become banks. For example, Circle, which handles USD Coin (USDC), recently announced that it has submitted an application to the OCC to establish a federally regulated national trust bank. If such approval is obtained, Circle will come under the direct supervision of the OCC and will be subject to regulations similar to those of traditional financial institutions.

The Genius Act has received praise from organizations and companies that support cryptoassets, but some Democratic lawmakers have warned that measures to protect consumers and prevent public officials from profiting from cryptoasset activities are insufficient.

Specifically, World Liberty Financial related to Mr. Trump and its stablecoin "USD1" are mentioned as examples.

However, although the Democratic Party delayed the deliberation of the Genius Bill in the Senate earlier this year, they ultimately voted in favor of a bill that included some revisions. In the end, the bill received significant bipartisan support in both the House and the Senate.