"Hagerty's GENIUS Act: Clarifying Stablecoin Regulations"

Senator Bill Hagerty Introduces The GENIUS Act to Regulate Stablecoins

Senator Bill Hagerty, a Republican from Tennessee, has introduced the GENIUS Act, a bill aimed at providing regulatory clarity for the issuance of stablecoins in the United States. The legislation, officially called the Guiding and Establishing National Innovation for US Stablecoins Act, seeks to create a structured regulatory framework for stablecoin issuers.

The GENIUS Act establishes licensing and reserve requirements for stablecoin issuers, ensuring that they have enough reserves to back the stablecoins they issue. The bill applies stricter Federal Reserve rules to issuers with over $10 billion in stablecoin assets, while issuers with less than $10 billion will follow state-level regulations.

The legislation also mandates that stablecoin reserves consist of US currency, Treasury bills, and other approved assets. Stablecoin issuers would be required to submit audited reports every month detailing the reserves backing their stablecoins. False reporting would carry criminal penalties.

Nonbank stablecoin issuers would fall under the supervision of the Office of the Comptroller of the Currency, an independent bureau within the Treasury Department. This measure aims to establish federal oversight while allowing innovation in the crypto industry.

The GENIUS Act has gained bipartisan support, with Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis serving as co-sponsors. The bill is expected to move through committees quickly and will be discussed further in an upcoming press conference with David Sacks.

The stablecoin market has surged to $205 billion, with Tether’s USDT token maintaining market dominance at a $140 billion market cap. Tether’s market position is notable given Cantor Fitzgerald’s stake in the company, led by incoming Commerce Secretary Howard Lutnick. Its closest competitor, USDC, holds a market cap of $54 billion, according to CoinGecko data, highlighting the significant scale and influence of these issuers in the financial ecosystem.

The legislation comes amid increasing scrutiny of Tether’s reserves and rising concerns about stablecoins’ capacity to withstand large-scale redemptions, underscoring the urgency for clear regulatory oversight. The bill aims to support financial inclusion by making transactions more efficient and promoting the U.S. dollar’s global dominance.

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