The U.S. Senate passed the stablecoin regulatory bill known as the “Genius Act,” marking the first federal legislation for the cryptocurrency industry. This law contains issuance requirements and regulatory frameworks for stablecoins designed for price stability and is expected to serve as a significant milestone for U.S. digital asset policy.

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According to the Wall Street Journal (WSJ) on 1st (local time), the Genius Act allows only depository institutions approved by the Federal Reserve (Fed) to issue stablecoins, and non-bank institutions must be supervised by financial authorities in each state. It also specifies reserve requirements for deposits, anti-money laundering (AML) obligations, and quarterly disclosure obligations.

Additionally, the bill includes consumer protection provisions related to the types of pegged assets and reserves, as well as redemption procedures in case of incidents. This is interpreted as a response to large-scale value collapses that have occurred in the past, such as the Terra-Luna incident, as the stablecoin market rapidly expanded over the years.

The bill also includes clear accounting oversight provisions for stablecoin issuers and establishes that regulatory authorities have the authority to take enforcement actions against violations. Particularly, by mandating disclosures related to risk factors such as defaults and insufficient reserves, user protection measures have been strengthened. In addition, issuers are required to submit audit reports every quarter, which is expected to contribute to reducing opaque operations in the market.

However, some provisions are still criticized as vague. Concerns have been raised about which state financial authorities can approve issuance for non-bank institutions and how this will link to federal supervision.

The passage of the bill was facilitated by bipartisan agreement between the Democratic and Republican parties. Notably, Republican Cynthia Lummis (Wyoming) and Democrat Kirsten Gillibrand (New York) have jointly promoted this regulatory proposal along with market structure legislation, contributing to establishing a legal framework. The Senate Banking Committee also recently announced additional principles for regulating the cryptocurrency market, heralding a trend toward institutionalization of cryptocurrencies. The House is also concurrently discussing separate stablecoin legislation, which will undergo a final legislative process through negotiations between the two chambers.

This legislation is significant not only because it pertains to stablecoins but also because it lays the groundwork for the institutionalization of cryptocurrencies as a whole. The U.S. Congress is also expected to pursue additional legislation regarding token issuance, distribution, payments, and settlements across the entire market structure. Increased regulatory clarity is likely to positively impact innovation and investment attraction in the digital asset industry within the United States.

Moreover, this move is also seen as a possible signal to alleviate jurisdictional conflicts surrounding cryptocurrencies and to coordinate regulations between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

As major countries such as England, Singapore, and Australia have already established regulatory frameworks for digital assets, the passage of this bill is interpreted as a signal that the United States intends to re-engage in the global cryptocurrency policy competition. The industry expects that this type of federal legislation will reduce uncertainty and open the way for entry into the institutional framework.

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