"Hagerty's GENIUS Act Targets Tether, USD Coin in Stablecoin Regulation Push"

Senator Hagerty Introduces GENIUS Act to Potentially Regulate Tether and USD Coin in Stablecoin Framework

US Senator Bill Hagerty has introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act to the Senate, marking a significant step towards creating a regulatory framework for stablecoin payments. The legislation follows the release of a discussion draft in October, indicating a growing commitment to oversight in the cryptocurrency sector.

The GENIUS Act defines a payment stablecoin as a digital asset used for payments or settlements, pegged to a fixed monetary value. Under the legislation, stablecoin payments must be backed by US currency, demand deposits at insured institutions, Treasury bills, or other approved assets. This ensures that stablecoins maintain their value and stability, fostering trust in the digital currency ecosystem.

Furthermore, the Act mandates Federal Reserve oversight on stablecoin issuers with a market value exceeding $10 billion, following bank regulations. In contrast, the Office of the Comptroller of the Currency regulates nonbank issuers. Issuers with a market value below $10 billion are subject to state regulation. However, those above the threshold may apply for state-regulation exemption.

Currently, only Tether (USDT) and USD Coin (USDC) exceed the $10 billion market capitalization threshold. The GENIUS Act requires monthly audited reports on stablecoin reserves, with penalties for false reporting. It outlines clear procedures for institutions seeking licenses to issue stablecoins, promoting transparency and accountability in the sector.

Moreover, the Act establishes reserve requirements, tailored regulatory standards, and supervisory, examination, and enforcement mechanisms with defined limitations. These measures aim to balance innovation with consumer protection, ensuring the stability and security of the stablecoin market.

In the latest statement, Senator Hagerty emphasized the potential benefits of stablecoin innovation, highlighting how it could enhance transaction efficiency and drive demand for US Treasuries. He noted that the advantages of strong stablecoin development are vast and far-reaching, stating, "My legislation establishes a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto."

The bill is co-sponsored by Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis. In a social media post, Lum