How The GENIUS Act Will Lead To Crypto-Dollars #CriptoNews

The pace of regulatory and executive actions pertaining to the cryptoasset and blockchain sectors continues to accelerate, with the first ever U.S. digital asset press conference, the Senate Banking Committee continuing to discuss and roll back debanking initiatives, and SEC Commissioner Hester Peirce’s Crypto Task Force already making progress in establishing guidelines and frameworks for crypto regulation. With the flurry of headlines and soundbites it would be easy for investors and policy advocates to overlook an important throughline in virtually every policy move under the new Trump administration to date; strengthening and improving the U.S. dollar’s place as the global reserve currency via dollar backed stablecoins.

Senator Bill Hagerty introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, aiming to regulate US dollar-pegged crypto tokens, which according to public comments will focus on creating a safe and pro-growth environment for cryptoassets. The GENIUS Act builds on previous efforts to integrate stablecoins into the U.S. financial markets and banking system, including the Clarity for Payment Stablecoins Act. The GENIUS Act details several important aspects of potential forthcoming stablecoin regulation, but will also help accelerate the policy conversation around a crypto-dollar.

The GENIUS Act Increases Specificity To Stablecoins

Some of the much-needed specifics and clarity that the stablecoin sector has been searching for include, but are not limited to, the following. First, the bill as it is currently written and being discussed defines stablecoins as digital assets pegged to the U.S. dollar, which would seem to undermine efforts for commodity based or algorithmic-based stablecoins. Second, the bill seems to be advocating federal level regulation for two stablecoins in particular via the $10 billion market capitalization threshold for federal regulation; USDT and USDC. Since these two stablecoins combined have a market capitalization of nearly $200 billion, obtaining greater regulatory clarity over these two dollar-backed stablecoins is imperative toward greater adoption and utilization by both individuals and institutions.

An additional point of clarity embedded in the bill is the requirement that stablecoin issuers will have to undergo financial audits of reserves on a monthly basis. Seemingly a simple requirement this addition highlights one of most difficult aspects of stablecoin regulation to date. Tether and the USDT token have been, and remain, the dominant dollar-backed stablecoin by a large margin but have been beset by (justifiable) questions around the accounting for reserves and other financial reporting practices for years. The GENIUS Act, by (in essence) specifying these reporting requirements and oversight at the federal level, are setting the groundwork for comprehensive, consistent, and comparable regulation for stablecoins seeking to operate in U.S. markets.

The GENIUS Act Will Lead To Crypto Dollars

One of the most important discussions connected to tokenized assets and especially stablecoins is something that is outside of the crypto; how can the United States take effective action to maintain the reserve currency status of the U.S. dollar? The dollar has faced challenges to its geo-political dominance in the past, but few instances of these challenges have been combined with the shifting political landscape unfolding at the present. The European Union, partially due to increasingly strident language by the U.S. related to tariffs and NATO-affiliated defense spending, is looking to expand the use of the euro on a global basis. China, the second largest economy in the world and definitive rival to the United States, is expanding trade, infrastructure, and use of the yuan on a continuous basis. Lastly, the BRIC nations are actively seeking to develop and deploy a joint currency, which would seek to serve as an international medium of exchange.

The dollar’s status as global reserve currency is not one that can be assumed to continue over the coming decades, and even less so in the face of technologies that are redefining payments and financial markets on a daily basis. The GENIUS Act represents an excellent first step toward codifying and regulation around dollar backed stablecoins, relegates non-dollar backed stablecoins to secondary status, and will improve the transparency with which these coins operate. As the dollar seeks to maintain its leading status on the global level the embracing of technologies to improve the efficiency and ease with which dollars can be used should be an imperative. Much like how the rise of the petro-dollar created a virtually endless demand for dollars, tethering the value to the paradigm shifting technology of tokenized payments will go a long way toward ensuring continued leadership.

The currencies and nations that embrace tokenization and blockchain-based payments will be the ones that assume and maintain leadership into the future; U.S. policymakers should continue to focus on integrating stablecoins and integrating blockchain to underpin the U.S. dollar.