PASSING OF THE GENIUS ACT

The GENIUS Act, officially titled the "Guiding and Establishing National Innovation for U.S. Stablecoins Act," establishes a regulatory framework for stablecoins in the United States. This act, signed into law by President Trump, aims to regulate the $238 billion stablecoin market, providing clearer guidelines for issuers and creating a legal category for these digital currencies. 

What is a Stablecoin?

A Stable coin is a digital asset pegged to fiat currency like the U.S. dollar. Intended for payments or settlements.

Framework for issuance requirements.

Only certain approved entities are allowed to create/mint Stablecoins and only after complying with requirements regarding capital, liquidity, risk management, and other rules set forth by the government.

Consumer protection

Stablecoin issuers are required to maintain a one to one backing for each coin in U.S. dollars as well as short term Treasury bills. This will prevent situations where the Stablecoin in question is not fully backed so as to prevent loss of value to coin holders.

Bankruptcy Superiority

Stablecoin holders will be prioritized in any bankruptcy procedures, which will ensure any losses will be recouped by the holders in case of insolvency on the part of the coin issuer.

Monthly disclosures and Annual audits in order to insure transparency.

Stablecoin issuers are prohibited from issuing yield or interest on Stablecoins. This should in theory prevent the creation of risky financial products or structures.

Anti money laundering innovation

The Genius act mandates that all Stablecoin issuers comply with Bank Secrecy Act requirements as well as AML (anti-money laundering), CFT (countering of terrorism), and OFAC (office of foreign assets) sanctions.

Federal and State oversight

The Genius Act provides Federal and State oversight for Stablecoin issuers allowing them to make routine inspections and conduct enforcement actions if necessary.

No misleading representations

Issuers are prohibited from making false representations such as claiming to be insured by the Government or having Federal backing.

Clear Disclosures

Stablecoin issuers must provide disclosures about material risks, reserve assets, and redemption rights concerning their Stablecoins.

Regulatory Authority over Advertising

Federal agencies have the authority to enforce fair marketing and communication standards for Stablecoin

advertising.

Bipartisan support

The U.S. Senate passed the Genius Act/Bill 68 for to 38 against. The U.S. House of Representatives passed 308 for to 122 against. This was an overwhelming show of support for Digital Assets from both Republicans and Democratic lawmakers highlighting the understanding of the need of rules and regulations concerning the use of Stablecoins all over the world.