Expedited Senate Vote on Groundbreaking Legislation Regarding Digital Currencies (Stablecoins) by the Majority Leader
Rewritten Output
The Genius Act and the STABLE Act: A Battle for US Stablecoin Regulation
In a Nutshell
- The Genius Act, backed by Senator Bill Hagerty, aims to establish a regulatory framework for stablecoins in the US, with a focus on preserving the dominance of the US dollar in global finance.
- The STABLE Act, currently making its way through the House, takes a more restrictive approach to stablecoin issuance.
- Both bills are facing opposition from traditional banking advocates who argue they pose threats to consumers and the broader financial system.
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Senate Majority Leader John Thune recently kickstarted procedures to speed up a vote on the Genius Act, a bill intended to regulate US dollar-pegged stablecoins. The Genius Act, sponsored by Senator Bill Hagerty and co-sponsored by Senators Tim Scott and Cynthia Lummis, is seen as a means to meet President Donald Trump's "mandate to create a regulatory framework for digital assets."
The bill, which passed through committee in March, seems poised for a floor vote by the end of April. Its significance extends beyond regulating stablecoins; it aims to strengthen the US dollar's position in global finance.
However, the bill has drawn significant criticism from traditional banking circles. Arthur Wilmarth, Professor Emeritus of Law at The George Washington University, expressed concerns that the bill could result in nonbank stablecoin issuers competing with FDIC-insured banks by offering "shadow deposits," potentially destabilizing the traditional banking system.
The Genius Act differs from the STABLE Bill in several key areas. For instance, the Senate bill allows money market funds to be used as reserves, while the House version is more restrictive. Both bills establish a $10 billion threshold, but with differing approaches. The STABLE Act imposes a two-year ban on new algorithmic stablecoin issuances, while the Genius Act only requires a brief study.
With the Trump administration eager to have both bills signed before Congress's August recess, the race is on to establish a comprehensive regulatory framework for US stablecoins. Last week, reports surfaced suggesting that Coinbase, the largest crypto firm in the US, was attempting to prevent both the Genius Act and the STABLE Act from reaching floor votes.
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Enrichment Insights
- The Genius Act and the STABLE Act represent competing approaches to stablecoin regulation in the US, both advancing through legislative processes.
- The key differences between the two bills lie in their regulatory models, eligible issuers, reserve requirements, treatment of algorithmic stablecoins, consumer protections, legal classifications, and emphasis on the US dollar.
- The Genius Act emphasizes a decentralized approach that preserves state regulatory roles, while the STABLE Act prioritizes centralized federal control and risk mitigation.
- Both bills face opposition from traditional banking advocates who argue they pose risks to consumers and the financial system.
- The Genius Act, in its current version, differs from the STABLE Act in its regulatory model, eligible issuers, reserve requirements, treatment of algorithmic stablecoins, consumer protections, legal classifications, and emphasis on the US dollar.
[1] Permits state oversight for issuers under $10B market capitalization.[2] Encourages global US dollar-backed stablecoins.[3] Aims to maintain US competitiveness in global stablecoin markets.[4] Strict issuer qualifications and reserve rules.[5] An administration goal for implementation by August 2025.
- The Genius Act, anchored by Senator Bill Hagerty, permits state oversight for stablecoin issuers below a $10 billion market capitalization.
- The Genius Act encourages the development of global US dollar-backed stablecoins, aiming to preserve the US's competitiveness in the global stablecoin markets.
- One of the objectives of the Genius Act is to establish a regulatory framework for digital assets, following President Donald Trump's mandate.
- The Genius Act aims to strengthen the US dollar's position in global finance, an objective that extends beyond stablecoin regulation.
- The Genius Act faces criticism from traditional banking circles, with concerns raised about nonbank stablecoin issuers offering "shadow deposits," which could potentially destabilize the traditional banking system.
- TheSTABLE Act, currently advancing through the House, takes a more restrictive approach to stablecoin issuance compared to the Genius Act.
- The STABLE Act imposes a two-year ban on new algorithmic stablecoin issuances, whereas the Genius Act only requires a brief study on the topic.
- With both the Genius Act and the STABLE Act progressing through their respective legislative processes, there is a race to establish a comprehensive regulatory framework for US stablecoins, with the goal of having both bills signed before Congress's August recess.
