New Legislation Proposed for Stablecoin Regulation by Senator Bill Hagerty
Senator Bill Hagerty is set to introduce groundbreaking legislation on Feb. 4 aimed at creating a regulatory framework for stablecoins. The bill, known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, will bring significant changes to the stablecoin industry.
Key Provisions of the GENIUS Act
– Stablecoin payments must be backed by US currency, Federal Reserve notes, Treasury bills, or other assets.
– Monthly audited reports on reserves are mandatory for stablecoin issuers.
– False reporting on reserves will lead to criminal penalties.
Regulatory Clarity for Stablecoins
Regulators have been closely monitoring the quality of assets supporting stablecoins like Tether’s USDT token. The GENIUS Act aims to offer regulatory clarity for stablecoins, which are digital tokens pegged to real-world assets like the US dollar. The proposed legislation seeks to enhance credibility and encourage wider adoption of stablecoins within the financial system.
Support and Co-Sponsorship
Senator Hagerty believes that the new legislation will foster innovation and align with the President’s vision of making the US a global hub for cryptocurrency. The bill has garnered support from Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis, indicating bipartisan interest in regulating the crypto industry.
Regulatory Oversight by the OCC
The Office of the Comptroller of the Currency, a bureau under the Treasury Department, will oversee nonbank stablecoin issuers to ensure compliance with the new regulatory framework.
Driving Growth in the Stablecoin Market
President Trump has shown commitment to supporting the crypto industry by reducing regulatory hurdles and appointing crypto-friendly regulators. The proposed legislation could reignite growth in the US stablecoin market, which has seen a decline in volume on US platforms due to regulatory uncertainties.
Global Trends in Stablecoin Adoption
According to Chainalysis’ “2024 Geography of Crypto Report,” stablecoin volume on US exchanges has decreased, signaling a shift towards global adoption. The stablecoin market has surpassed $215 billion in size and $34 trillion in yearly transfer volume as of Feb. 3, highlighting the growing importance of stablecoins in the digital asset space.