Author: 0xTodd
Original Title: Never Underestimate the Significance of the US Stablecoin GENIUS Act
If successfully passed, this US stablecoin law, the GENIUS Act, will be of great significance, and I even believe it could enter the top five in Crypto history.
Although abbreviated as GENIUS Act and literally translated as the Genius Act, it actually stands for Guiding and Establishing National Innovation for U.S. Stablecoins.
The proposal is long, and here are a few key points:
1. Mandatory 1:1 Full Asset Backing: Covering cash, bank demand deposits, and short-term US Treasury bonds. Misappropriation and re-pledging are strictly prohibited.
2. High-Frequency Information Disclosure: At least monthly reserve reports, with external audits introduced.
3. Licensing: Once the issuer's stablecoin circulation market value exceeds $10 billion, they must transition to the federal regulatory system within a specified timeframe, adopting bank-level regulation.
4. Custody Introduction: Custodians of stablecoins and their reserve assets must be regulated, qualified financial institutions.
5. Clear Definition as Payment Medium: The act defines stablecoins as a new type of payment medium, primarily regulated by the banking system, rather than securities or commodities regulatory systems.
6. Recruiting Existing Stablecoins: An 18-month buffer period after the act's implementation, aimed at encouraging existing stablecoin issuers (such as USDT, USDC) to quickly obtain licenses or become compliant.
—Dividing Line—
After the main text, let me discuss the significance of this matter with excitement.
For so many years, when people asked what application the Crypto industry has developed in 16 years, you can now confidently say - stablecoins.
First, Clearing Concerns is a Prerequisite
Some people previously held opposing views. In the past, stablecoins were seen as an opaque black box. Every few months, there would be FUD - either Tether's assets being frozen or Circle having significant gaps.
Actually, if you think carefully, Tether easily earns billions of dollars annually from underlying government bond interest. Circle also made $1.7 billion in profit last year.
They're making money effortlessly, and from a motivational perspective, they have no incentive to do wrong. In fact, they are the most eager to be compliant.
Now, this opaque black box will become a transparent white box.
Previously, people would criticize Tether's money potentially being frozen by the US, but now it will be directly placed in US-compliant custody institutions with high-frequency information disclosure, which can be directly reassuring.
【No Need to Worry About Running Away】is such a significant advantage - I believe all Crypto people understand this.
Second, Controlling the Standard is Important
Stablecoins were once on the verge of having their victory stolen by CBDC. Regardless of which country, if there were a central bank digital currency, it would likely not be built on blockchain, at most on some internal alliance chain, which honestly has no meaning.
When CBDC was at its peak, it was the most dangerous time for stablecoins.
If CBDC had succeeded back then, stablecoins would have been endlessly suppressed into a dark corner, and blockchain would only play a minimized role.
The remaining half-dead stablecoins would even have to learn CBDC standards, completely losing their voice of authority.
But now, stablecoins have (almost) won.
Everyone will instead need to learn the 【Blockchain+Token】standard.
Many blockchains currently have no meaningful applications, with stablecoin transfers being the only use. For example, on Aptos, the only scenario I use is transferring between Binance and OKX.
Now, with stablecoins being legislated, what does this mean?
That's right, blockchain will become the only standard.
In the future, every stablecoin user will first need to learn how to use a wallet.
As a side note, I believe Ethereum's push for EIP-7702 is truly forward-looking. While other chains are rushing into meme, thank Ethereum for still insisting on account abstraction.
EIP-7702 is account abstraction, which can support: Social account wallet registration Paying gas with native currency And so on
This solves the last mile for new users to massively use stablecoins.
Third, Entering a New Era of Funding
Once stablecoins receive legislative support, deposits and withdrawals will become easier.
Let's imagine a scenario: Previously, due to stablecoins' gray attributes, it was impossible, but after the act passes, many traditional brokers can support stablecoins themselves. US stock investors' money can instantly become stablecoins and be directly injected into Coinbase in a second, believe it or not.
Let's imagine another scenario: If the GENIUS Act successfully passes through the House, next, you'll see:
Because the profit is too lucrative, existing stablecoin leaders and new traditional giants will frantically promote their stablecoin products.
An outsider will start using stablecoins due to these promotions. Then one day, they'll discover that since the wallet account is already created, how difficult would it be to understand Bitcoin?
Stablecoins are a massive Trojan horse. The moment you start using stablecoins, you've unknowingly stepped halfway into the Crypto world.
Fourth, Finally
As a massive reservoir for absorbing US debt, while stablecoins cannot directly convert debt, they at least provide ammunition for the US debt secondary market. These functions are quite important, and slowly, stablecoins will become part of the US debt market's body. Therefore, once the US legislates this, after tasting this sweetness, they will never turn back to cancel it.
Moreover, we are confident that stablecoins are indeed one of our industry's great innovations. People who have used stablecoins will find it difficult to return to the traditional cash-banking system.
The act cannot go back, and users cannot go back. In the future, concerns will be cleared, standards will be controlled, and the era of massive funding seems imminent.
