GENIUS Act to Boost Stablecoins as Internet's Primary Exchange Medium

Bernstein, a prominent Wall Street broker, has predicted that stablecoins are poised to become the primary medium of exchange on the internet once the GENIUS Act is enacted into law. The brokerage firm anticipates that the legislation, which is set to be voted on in the Senate this week, will be passed into law within the next few months.

The GENIUS Act, formally known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act, is designed to foster stablecoin innovation within the United States. According to Bernstein, the act will give U.S. regulated issuers a competitive advantage. The legislation mandates federal regulation for stablecoins with a market capitalization exceeding $10 billion, with the possibility of state regulation if it aligns with federal rules.

Stablecoins are a type of cryptocurrency whose value is pegged to another asset, such as the U.S. dollar or gold. They serve a crucial role in cryptocurrency markets by providing a payment infrastructure and facilitating international money transfers. Once the GENIUS Act is passed, Bernstein expects stablecoins to transition from being the money rail of crypto to the money rail of the internet.

The act treats stablecoins as digital cash, aiming to drive wider mainstream adoption for payments beyond just using these cryptocurrencies as a settlement currency for digital assets. This shift could significantly impact how transactions are conducted online, making stablecoins a more integral part of the digital economy.

Bernstein also noted that the GENIUS Act makes it challenging for non-financial public companies to become stablecoin issuers. This provision could influence the strategies of major e-commerce and tech platforms, such as Amazon and Walmart, which have reportedly been exploring the use of stablecoins. These companies may need to collaborate with regulated U.S. issuers rather than issuing their own stablecoins.