On June 18, the U.S. Senate passed the bipartisan GENIUS Act to establish a federal regulatory framework for USD‑pegged stablecoins, marking a major milestone for crypto regulation.
What does the GENIUS Act require?
- Issuers of stablecoins must back each coin with safe assets (USD, government money market funds, or other liquid assets) at a 1:1 ratio.
- Issuers must publish monthly reserve disclosures and comply with anti-money laundering rules.
- Issuers with over $50B in market cap must provide annual audited financial statements.
- Legislation ensures that holders of stablecoins are given priority claims on reserve assets if an issuer goes bankrupt.
Banks, crypto firms, and tech companies are quick to make moves:
- Coinbase is rolling out its stablecoin acceptance platform to merchants at scale, following its recent launch with Shopify.
- JPMorgan Chase will introduce a digital deposit token called JPMD, designed for institutional clients as an alternative to stablecoins, offering on-chain settlement, cross-border payments, and eventual interest payouts.
- Fiserv announced it will launch its own stablecoin, FIUSD, and broader stablecoin infrastructure by year’s end, at no extra cost to its 10,000+ financial institution clients and 6M merchants
- JD.com began testing HKD-pegged tokens in Hong Kong's regulatory sandbox, aiming to go public in Q4. (That one's not happening in the U.S., but I just wanted to demonstrate that the stablecoin movement is now happening worldwide.)
- It was also reported a couple weeks ago that Amazon, Walmart, Expedia, and major airlines are considering launching their own stablecoins.
Citigroup estimates that the stablecoin market will total about $1.6 trillion by 2030, a sevenfold increase from $230 billion in March.
So what's the benefit of stablecoins? Why is everyone hopping on the bandwagon?
Stablecoins enable near-instant, low-cost settlements, especially for cross-border transactions, which means no having to wait days for ACH or SWIFT transfers. It also reduces reliance on legacy payment rails like Visa, Mastercard, and wire transfers.
The benefits to issuers include reduced payment processing fees, plus the ability to hold and earn interest on customer reserves. For example, if Walmart issued $50B of stablecoins to customers and employees, it would earn interest on the $50B fiat sitting in its bank, as well as bypass high transaction fees by Visa and Mastercard when customers spend the coins within their ecosystem.
For consumers, this is quickly going to turn into one giant and annoying clusterfuck of various stablecoins that every company is pushing them to adopt. “Crap, I'm out of Expedia Bucks and I'm trying to buy this airline ticket.”
Meanwhile banks, rather than collectively work towards updating their archaic ACH and SWIFT payment rails, are jumping on the stablecoin bandwagon faster than Amazon is embracing AI. Is JPMorgan Chase aware that we could have near-instant, low-cost settlements in USD if their payments weren't running on a system BUILT IN 1972!
Rather than update our existing infrastructure to serve business and consumer needs for the next 100 years, we're allowing major institutions to build a private layer on top of it — and it's dumb. Privately issued stablecoins are not the solution to modernizing our financial digital infrastructure. A truly bipartisan movement would have introduced a bill aimed at upgrading the systems that USD runs on — propping up the stablecoin industry versus building it on top of a house of cards.
This isn't going to end well.