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

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

Main Contents 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 US dollar cash, insured bank deposits, and short-term US Treasury bonds. Issuers must hold at least one US dollar in compliant reserves for each stablecoin. Issuers with a circulation exceeding 50 billion dollars must conduct monthly reserve disclosures and audits.

2. Tiered regulation: Implement tiered regulation based on the scale of the issuer. Large issuers that issue stablecoins exceeding $10 billion are subject to federal regulation; smaller issuers can opt for state-level regulation.

3. Prohibited Algorithmic Stablecoins: The use of "algorithmic stablecoins" that rely on programs or internal cryptocurrencies to maintain value is explicitly prohibited.

4. Prohibition of providing returns: Payment-based 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 the Bill

Stablecoins have become a key infrastructure in global financial activities. Currently, the total market capitalization of stablecoins exceeds $250 billion, mainly dominated by a few large companies. A certain company recently went public on the New York Stock Exchange, reaching a market capitalization of $37 billion, with its stock price increasing over 400% after the listing, reflecting the market's high expectations for the mainstream adoption of stablecoins.

Stablecoins are deeply integrated into 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 aware of cryptocurrencies are interested in using stablecoins. The number of large companies planning to adopt or explore stablecoins has increased more than three times compared to last year.

The adoption of stablecoins in emerging markets is accelerating. In regions with high currency volatility, stablecoins provide an alternative option. Data shows that Latin America and Sub-Saharan Africa lead the world in retail and professional-grade stablecoin transfers, with annual growth rates exceeding 40%; East Asia and Eastern Europe follow closely behind, growing at 32% and 29%, respectively.

The EU, Singapore, and Hong Kong have made progress in stablecoin regulation. The US has previously delayed clear policies due to political differences, but the passage of the GENIUS Act may break this deadlock.

Impact on the Industry

1. Regulated stablecoins: US stablecoin issuers will benefit from regulatory legitimacy, creating conditions for institutional funds to enter the on-chain payment space in compliance. The bill requires that stablecoins must be backed by cash or US Treasuries, solidifying the position of mainstream compliant issuers.

2. Offshore stablecoins: The era of regulatory arbitrage may come to an end. The bill imposes heavy penalties on unregulated offshore issuers. Certain large stablecoin issuers may face challenges in the future if they do not register in the United States.

3. Fintech companies: U.S. cryptocurrency legislation is shifting from "relying solely on enforcement" to structured policy-making. The transition of stablecoins into legitimate financial instruments will drive retail user adoption and capital influx. Some tech companies are accelerating their layout in the stablecoin sector through mergers and acquisitions.

Future Development

1. House Review and Potential Revisions: Pay attention to amendments that may be proposed by the House, as any changes could impact the future stablecoin landscape.

2. Regulatory rules and implementation: Specific rules regarding capital adequacy, liquidity, risk management, and other areas still need to be further developed by regulatory agencies. Attention should be paid to how institutions such as the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Financial Crimes Enforcement Network convert the framework into specific rules, as well as the actions of various states under this regulation.