The U.S. Senate Passes the GENIUS Act, Establishing a Clear Framework for Stablecoin Regulation

On June 17, the U.S. Senate passed the GENIUS Act, establishing a clear federal regulatory framework for dollar-backed stablecoins. The bill will next be submitted to the House of Representatives and the President for approval, and if passed, will officially take effect.

Main Content of the GENIUS Act

1. 1:1 Asset Backing: Stablecoins must be fully backed by high-quality, liquid assets such as USD cash, insured bank deposits, and short-term U.S. Treasury bills. Issuers must hold at least one dollar in compliant reserves for each stablecoin issued. Issuers with a circulation exceeding $50 billion must conduct monthly reserve disclosures and audits.

2. Tiered Regulation: Implement federal regulation for large issuers of stablecoins that issue over $10 billion; smaller issuers may opt for state-level regulation.

3. Prohibited Algorithmic Stablecoins: The "algorithmic stablecoins" that rely on programs or internal encrypted assets to maintain value are explicitly prohibited.

4. Prohibition on Providing Returns: Payment-type stablecoins must 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.

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

The Importance of Stablecoins

Stablecoins have become a key infrastructure in global financial activities. Currently, the total market value of stablecoins exceeds $250 billion, primarily dominated by a few large issuers. A certain stablecoin issuer recently went public on the New York Stock Exchange with a market value of $37 billion, and since its listing, the stock price has increased by over 400%, reflecting the market's high expectations for the mainstream adoption of stablecoins.

Stablecoins are deeply embedded in the global payment ecosystem, with an annual transaction volume exceeding 30 trillion USD and active addresses reaching 261 million. Surveys show that 81% of small and medium-sized enterprises that are aware of 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.

In emerging markets, the adoption of stablecoins is accelerating. Regions with severe currency fluctuations view stablecoins as an alternative option. Latin America and sub-Saharan Africa are experiencing the fastest growth in retail and professional-grade stablecoin transfers, with an annual growth rate exceeding 40%.

The EU, Singapore, and Hong Kong have made progress in stablecoin regulation. The US has previously made slow progress due to political divides, but the passing of the GENIUS Act may break the deadlock.

Impact on the industry

1. Regulated stablecoins: Compliant issuers will benefit from regulatory legitimacy, paving the way for institutional funds to enter the on-chain payment space. Unregulated issuers or those providing illegal coin support may exit the US market.

2. Offshore stablecoins: The era of regulatory arbitrage may come to an end. Offshore issuers not registered in the United States will face challenges, but they are unlikely to be completely replaced in the short term.

3. Fintech Companies: US cryptocurrency legislation is shifting from "relying on enforcement" to structured policy-making. The legalization of stablecoins will drive broader adoption and capital inflow. Large tech companies issuing stablecoins will face strict compliance requirements, potentially creating opportunities for startups.

Future Outlook

1. House of Representatives Review: The bill will enter the review stage in the House of Representatives, where amendments may occur, affecting the future landscape of stablecoins.

2. Regulatory rule formulation: Regulatory agencies need to translate the legislative framework into specific rules, including aspects such as capital adequacy, liquidity, and risk management.

3. State-level response: The specific measures taken by each state under the new regulations are worth noting.

The establishment of a stablecoin regulatory framework marks an important step towards a more standardized development of the cryptocurrency industry, which will have a profound impact on the entire ecosystem.