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GENIUS Act Nears Final Approval for U.S. Stablecoin Regulation
In a groundbreaking move, the United States Congress has formally approved the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), paving the way for a comprehensive regulatory framework governing the issuance, backing, and oversight of stablecoins. The legislation is now awaiting President’s signature to become a law.
The passage of this landmark bill marks a significant shift in how the U.S. regulates stablecoins, introducing a structured and enforceable framework aimed at protecting consumers while promoting responsible innovation. The Act requires stablecoin issuers to fully back their tokens with reserves held in U.S. dollars or equivalent liquid assets, effectively prohibiting the use of algorithmic or insufficiently backed models.
The GENIUS Act is designed to ensure transparency by mandating regular reserve audits and public disclosures, providing stakeholders with critical insights into the financial health of these digital assets. Moreover, it restricts interest-bearing stablecoins, precluding issuers from offering yields solely for holding their tokens – a move intended to prevent stablecoins from operating like unregulated savings accounts.
By excluding algorithmic stablecoins, which rely on code-based balancing mechanisms rather than real-world reserves, the Act aims to maintain a robust foundation of trust, security, and accountability. As such, this legislation could serve as a blueprint for other nations seeking to bring stability and credibility to their respective crypto economies.
The impact of this act will undoubtedly be far-reaching, as it brings U.S.-based stablecoin issuers under a unified regulatory umbrella. This is crucial in maintaining the integrity and reliability of these digital assets within the global financial system.
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Source: zebpay.com
