The GENIUS Act is more than just a stablecoin law.
Its insights and practical implications are now apparent and it’s getting more nuanced.
# It defines, “payment stablecoin” which is different from stablecoin.
– Only approved issuers, called Permitted Payment Stablecoin Issuers, will be allowed to issue payment stablecoins. But the real story is how this changes the balance between banks, fintechs, and nonbanks.
– Nonbank issuers can now apply for OCC charters and even seek access to Federal Reserve master accounts. This move has already triggered pushback from traditional banking associations worried about an uneven playing field.
– State issuers under $10B in circulation will have a separate path, subject to state review. Large public companies will need unanimous regulatory approval before they can issue any payment stablecoin.
– The report also highlights how Circle’s USDC faced challenges when USDC temporarily lost its peg during the Silicon Valley Bank episode.
– Beyond regulation, the impact could be broader. Stablecoins backed by short-term Treasuries may influence fixed income markets, while easier conversion from deposits to stablecoins could add pressure on bank liquidity.
– The GENIUS Act sets the tone for how digital dollars will function. Not just as tokens on a blockchain, but as regulated instruments reshaping the foundation of payments and liquidity.
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