Senate to Vote on GENIUS Act, Boosting USDC, RLUSD

The Senate Banking Committee is poised to vote on the updated Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act on March 13. This bill, introduced by Republican Senator Bill Hagerty and co-sponsored by Senators Cynthia Lummis, Tim Scott, Kirsten Gillibrand, and Angela Alsobrooks, aims to establish a regulatory framework for stablecoins with market caps over $10 billion, bringing them under Federal Reserve regulations. Stablecoins with market caps under $10 billion would have the option to opt into state-level regulation.

The updated bill incorporates significant improvements to various provisions, including consumer protections, authorized stablecoin issuers, risk mitigation, state pathways, insolvency, and transparency. These updates were made following bipartisan consultations, ensuring a more comprehensive and balanced approach to stablecoin regulation. The bill's primary goal is to ensure that stablecoins are backed by sufficient reserves and that issuers are subject to appropriate oversight, thereby mitigating potential risks associated with these digital assets.

The GENIUS Act is part of a broader effort to regulate the cryptocurrency industry, which has seen substantial growth in recent years. The bill addresses the increasing popularity of stablecoins, which are used for transactions and as a store of value. However, the bill is expected to face scrutiny from lawmakers who have concerns about the potential risks associated with stablecoins, such as their use in illicit activities and their impact on financial stability.

In addition to the GENIUS Act, the Senate Banking Committee is expected to consider other legislation related to cryptocurrencies and blockchain technology. These bills aim to provide a regulatory framework for the industry, ensuring that it is subject to appropriate oversight and that consumers are protected from fraud and other risks. The committee's actions are expected to have a significant impact on the future of the cryptocurrency industry and the broader financial system.

The updated GENIUS Act also imposes extra high standards on foreign stablecoin issuers, particularly in areas such as reserve and liquidity requirements, money laundering checks, and sanctions checks. This move is expected to give US-issued stablecoins a competitive advantage, as most foreign issuers may find these standards challenging to meet. This could potentially benefit US-based stablecoin issuers like Circle’s USDC and Ripple Labs’ Ripple USD (RLUSD), which are better positioned to comply with these stringent requirements