Source: Cointelegraph
Original: “Epic Good News for the Crypto World? The U.S. 'Genius Act' Will Disrupt the Stablecoin Landscape”

“In the past, people's impression of stablecoins was that they were an opaque black box.” Notable crypto KOL 0xTodd recently pointed out that concerns about stablecoins have become the biggest obstacle to their widespread adoption. However, this situation may be on the verge of change. Recently, the U.S. stablecoin bill, the “GENIUS Act” (hereinafter referred to as the “Genius Act”), has attracted widespread attention from the crypto community. If this bill is successfully passed, it could have a disruptive impact on stablecoins and the entire cryptocurrency market, with some industry insiders even calling it “one of the top five turning points in Crypto history.” So, what are the key contents of this highly anticipated bill? How will it reshape the future of the crypto market?

I. “Genius Act”: A Name for Stablecoins?

The full name of the “GENIUS Act” is “Guiding and Establishing National Innovation for U.S. Stablecoins.” From the name, we can sense that the U.S. government hopes to provide clear guidance and support for the development of stablecoins through this bill.

The bill mainly includes the following core points:

1:1 Full Asset Reserve: The bill mandates that stablecoin issuers must hold equivalent reserve assets, limited to cash, bank demand deposits, and short-term U.S. Treasury bonds. At the same time, it strictly prohibits misappropriation and re-pledging, ensuring that every stablecoin in users' hands has corresponding assets as support.

Frequent Information Disclosure and External Audits: Stablecoin issuers are required to publish reserve reports at least once a month and introduce external audits to increase operational transparency and accept public supervision.

Licensing System and Tiered Regulation: For large stablecoins with a market capitalization exceeding $10 billion, the bill requires them to transition into the federal regulatory system within a specified timeframe, subjecting them to banking-level regulation. This helps enhance the safety and stability of large stablecoins and reduce systemic risks.

Clear Payment Medium Status: The bill clearly defines stablecoins as a new type of payment medium, primarily subject to banking regulatory systems rather than securities or commodity regulatory systems, clearing legal obstacles for the compliant development of stablecoins.

“Reconciliation” of Existing Stablecoins: The bill sets a maximum 18-month buffer period, aimed at urging existing stablecoin issuers (such as USDT, USDC, etc.) to obtain licenses or integrate into the compliance system as soon as possible.

II. Why Call It “Epic Good News”?

The “GENIUS Act” has garnered attention and is viewed by some industry insiders as a milestone event mainly due to the following potential impacts:

Clearing Trust Barriers and Accelerating Mainstream Adoption: For a long time, the transparency issue of stablecoins has been a significant factor hindering their widespread acceptance. The bill, through mandatory full reserves and frequent information disclosures, is expected to dispel users' doubts about the “black box” operation of stablecoins, enhance their trust, and promote more people to use stablecoins for payments and transactions.

Establishing Industry Standards and Gaining Voice: As central bank digital currencies (CBDCs) are on the rise, the introduction of this bill effectively establishes industry standards for blockchain-based stablecoins, consolidating their position as important payment tools in the digital economy era and avoiding the risk of stablecoins being “robbed of their fruits” by CBDCs.

Lowering Barriers to Entry and Embracing Innovation: By clarifying the legal status of stablecoins, the bill lowers the barriers to entry for traditional financial institutions to participate in the stablecoin market, encouraging more innovative companies to enter this field and promoting the prosperity of the stablecoin ecosystem.

Promoting Blockchain Technology Applications: The widespread use of stablecoins will directly drive the development of blockchain technology. Users need to use wallets for stablecoin transfers, which helps promote the popularization of technologies such as account abstraction and lowers the barriers for users to utilize blockchain applications.

III. Potential “Catfish Effect”: Reshaping the Cryptocurrency Market Landscape?

If the “GENIUS Act” is ultimately passed, it will have a profound impact on the cryptocurrency market:

Deposits and Withdrawals May Become More Convenient: With the legal status of stablecoins recognized, traditional financial institutions may become more actively involved in the stablecoin market, providing users with more convenient deposit and withdrawal channels and reducing transaction costs.

Traditional Brokers Entering the Market: The passage of the bill reduces regulatory uncertainty, and more traditional brokers may launch stablecoin trading services, offering users more diversified investment options.

Giants Accelerating Layout: The profit prospects of the stablecoin market will attract more giant enterprises to enter, leading to more intense competition. Existing stablecoin leaders and newly entering traditional giants may engage in fierce market competition, launching various promotional activities to attract users.

IV. Potential Risks: Not “All Good News”

Of course, we also need to rationally view the risks that the “GENIUS Act” may bring:

Increased Compliance Costs: The implementation of the bill may increase the compliance costs for stablecoin issuers, especially for small institutions, which may create certain pressures.

Limited Innovation Space: Overly strict regulations may limit the innovation space for stablecoins, making it difficult to meet users' diverse needs.

The introduction of the U.S. stablecoin bill, the “GENIUS Act,” undoubtedly injects a shot of adrenaline into the cryptocurrency market. If this bill can be successfully passed, it is expected to clear many obstacles to the development of stablecoins, promote their wider application, and bring new development opportunities to the entire cryptocurrency industry.

(Disclaimer: This article is merely a market observation and analysis based on publicly available information and does not constitute any investment advice.)

Related: Senate Stablecoin Bill Vote Sparks Division Within the Democratic Party, Anti-Corruption Concerns Become Controversial Focus

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