Senator Hagerty’s Proposal for Regulating Stablecoins: The Arrival of the GENIUS Act
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US Senator Bill Hagerty Introduces GENIUS Act for Stablecoin Regulation

Senator Bill Hagerty has made a bold move in the Senate by introducing the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, setting the stage for a comprehensive regulatory framework for stablecoin payments.

The GENIUS Act defines payment stablecoins as digital assets used for transactions or settlements, anchored to a fixed monetary value. Upholding the legislation, stablecoin payments are required to be backed by US currency, demand deposits at insured institutions, Treasury bills, and various other assets.

Notably, the Act calls for Federal Reserve oversight on stablecoin issuers with a market value exceeding $10 billion, akin to bank regulations. On the other hand, nonbank issuers are to be regulated by the Office of the Comptroller of the Currency.

While issuers with a market value below $10 billion fall under state regulation, those surpassing this threshold can seek exemption from state oversight.

Currently, Tether (USDT) and USD Coin (USDC) are the sole stablecoins exceeding the $10 billion market capitalization mark.

Under the Act, monthly audited reports on stablecoin reserves are mandated, with penalties for falsified reporting. It further outlines clear guidelines for institutions seeking licenses to issue stablecoins, alongside establishing reserve requirements, tailored regulatory standards, and robust supervisory mechanisms with defined limitations.

Senator Hagerty extolled the potential benefits of stablecoin innovation, stressing its ability to enhance transaction efficiency and bolster demand for US Treasuries. He emphasized the wide-reaching advantages that robust stablecoin development could bring forth.

"My legislation paves the way for a secure and growth-oriented regulatory environment that will unlock innovation and support the President's vision to position America as a leading hub for crypto," Hagerty affirmed.

The bill has garnered bipartisan support, with Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis coming on board as co-sponsors.

In light of an upcoming pivotal moment for digital assets in 2025, Senator Lummis underscored the urgency for the US to take proactive steps in setting regulatory standards for stablecoins. Emphasizing the importance of a bipartisan framework, she highlighted its role in upholding the US dollar's dominance and fostering responsible financial innovation.

Amid expectations for swift progress, Fox Business reporter Eleanor Terrett shared insights from Senate staffers, projecting a smooth advancement of the bill through congressional committees.

Following a recent press conference on February 4, David Sacks, the White House's AI and crypto czar, voiced his backing for stablecoin regulation in the imminent future. Sacks, alongside other key House leaders, reaffirmed their commitment to prioritizing stablecoin regulation on the policy agenda.

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