Introduction to the GENIUS Act
The recent introduction of the “GENIUS Act” marks a significant milestone in regulating payment-based stablecoins in the United States, establishing a structured framework that aims to enhance the credibility of the burgeoning $260 billion stablecoin sector.
Main Provisions of the Act
- Asset Backing Requirement: Under the new legislation, stablecoin issuers must maintain a 1:1 backing of their tokens with robust liquid assets, such as US dollars, federally insured bank deposits, and money market funds. Notably, Tether’s USDT fails to comply with this mandate, as its reserves include alternative assets like gold, Bitcoin, and corporate debt rather than solely cash equivalents.
- Interest Prohibition: The law explicitly prohibits stablecoins from generating interest for holders, thereby categorizing them as mere digital equivalents of cash.
- Mandatory Transparency and Audits: Issuers are required to provide monthly updates regarding their reserve status and must undergo regular audits to foster market transparency and accountability.
- Anti-Money Laundering Protocols: The act mandates stringent AML and KYC procedures for stablecoin issuers to combat illegal financial activities and enhance customer verification processes.
- Regulatory Oversight: The legislation grants oversight authority to regulatory agencies, including the US Treasury, ensuring adherence to compliance standards among stablecoin issuers.
Market Implications
While Circle’s USDC fulfills the requirements set forth in the act, allowing it an advantageous position, Tether (USDT) still possesses various avenues to adapt and maintain its operations within the US market.
According to analysts at BiyaPay, in light of the enactment of the GENIUS Act, the platform continues to enhance its offerings and provides flexible solutions for cross-border transactions.
Users can deposit USDT for conversions into a range of currencies, including US dollars, euros, Hong Kong dollars, Singapore dollars, and over 30 additional fiat currencies, facilitating efficient and secure international money transfers.
Conclusion
With these regulatory changes affecting stablecoin policies, BiyaPay is committed to helping clients navigate market dynamics, optimize their asset distribution, and confidently progress in their financial ventures.
