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The GENIUS Act, which aims to regulate stablecoins in the US by establishing guidelines that ensure their safety and trustworthiness while addressing political concerns, is expected to be voted on before Memorial Day.
According to a Politico report citing Senate Majority Leader John, the vote to streamline the stablecoin segment of the crypto industry is expected before the May 26 Memorial Day break.
Industry Has Been Seeking Regulatory Clarity
The report stated that the Act, which aims to clarify and regulate stablecoins such as Tether’s USDT and Circle’s USDC, would likely receive bipartisan support on the House floor since at least five Democrats already voted in support at the Senate Banking Committee level.
Suppose all goes as anticipated, and the GENIUS Act receives a green light. In that case, it will become the first significant legislation during Trump’s presidency and a big win for the crypto industry seeking regulatory clarity.
Commenting on the latest development toward stablecoin regulation in the US, pro-crypto Republican Senator Cynthia Lummis reacted through an X post to say that the report was true. The Senator, who has never shied away from defending digital assets, called out the Federal Reserve a few days ago for its crypto withdrawal policy.
Much-Needed Clarity and Structure
The development comes at a time when Tether, the issuer of USDT, has announced plans to develop a stablecoin specifically designed for the US market. According to the firm’s CEO, Paolo Ardoino, the firm is eagerly waiting to see whether the GENIUS Act will pass, adding that they would wait for the new rules on stablecoin regulation before making their next move.
The GENIUS Act will introduce the much-needed clarity and structure expected within the growing stablecoin market. Additionally, the Republican-controlled House has also introduced the STABLE Act, which aims to introduce clear regulatory guidelines for the issuance of dollar-pegged stablecoins—cryptocurrencies intended to maintain a stable value by being backed by real-world assets.
Conclusion
The issue of stablecoin regulation in the US is a hot topic due to the popularity of dollar-pegged stablecoins, which are popular because of their fast, low-cost payments. Nonetheless, the sector’s progress has been hampered by the lack of a clear regulatory framework, especially around trust and safety issues.
The GENIUS Act aims to address these concerns by ensuring issuers of stablecoins comply with anti-money-laundering regulations, which include undergoing regular audits. The Act also clarifies that stablecoins are not classified as securities or commodities, resolving a key area of confusion.
Frequently Asked Questions
Does the SEC regulate stablecoins?
Transactions do not involve the offer and sale of securities, and such transactions do not need to be registered with the SEC, meaning they are not regulated by the SEC.
How are stablecoins regulated?
Stablecoin issuers are expected to get specific authorization to operate. They are also supposed to meet existing standards within the financial system, besides being required to follow Know Your Customer (KYC), Anti-Money Laundering (AML), and data privacy standards.
Do banks issue stablecoins?
Banks everywhere have the potential to issue stablecoins, which they can convert from dollars into tokens and then invest the underlying fiat in safe, interest-bearing assets like US Treasury bonds. However, stablecoin adoption is still slow because banks are waiting for direction on regulatory compliance and legal approval.
Appendix: Glossary to Key Terms
Stablecoins: Cryptocurrencies whose value is pegged or tied to that of another currency, commodity, or financial instrument.
GENIUS Act: A federal law proposed in the US aimed at regulating the payment of stablecoins.
STABLE Act: A proposed law that aims to regulate stablecoins by enhancing oversight and incorporating traditional financial safeguards into digital asset regulations.
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