GENIUS Stablecoin Act: A turning point in the history of Crypto, a double victory for US dollar hegemony and blockchain standards

Written by: 0xTodd

If the US stablecoin bill "GENIUS Act" is successfully passed, its significance will be very great. I even think it is enough to enter the top five in Crypto history.

Although it is abbreviated as GENIUS Act, which literally means Genius Act, it is actually Guiding and Establishing National Innovation for US Stablecoins.

The proposal is very long, and here are a few highlights to summarize:

Mandatory 1:1 sufficient assets: including cash, bank current deposits, and short-term U.S. Treasury bonds. At the same time, misappropriation and re-pledge are strictly prohibited.

High-frequency information disclosure: Publish a reserve report at least once a month and introduce external audits.

Issuance of licenses: Once the issuer's stablecoin circulation market value is > US$10 billion, it must be transferred to the federal regulatory system within the prescribed period and adopt banking-level supervision.

Introduction of custody: The custodian of stablecoins and their reserve assets must be a regulated qualified financial institution.

Clearly defined as a medium of payment: The bill clearly defines stablecoins as a new type of payment medium, which is primarily subject to the banking regulatory system rather than the securities or commodity regulatory system.

Recruiting existing stablecoins: The buffer period of up to 18 months after the bill comes into effect is intended to urge issuers of existing stablecoins (such as USDT, USDC, etc.) to obtain licenses or become compliant as soon as possible.

Now that I have finished the main story, I will take this opportunity to talk about the significance of this matter in an excited mood.

Over the past few years, people have asked, what applications have you developed in the 16 years of the Crypto industry?

From now on you can confidently tell others about stablecoins.

First, clearing away concerns is a prerequisite

Some people have held opposing views. In the past, people had the impression that stablecoins were opaque black boxes. FUD would occur every few months, either because Tether’s assets were frozen or because Circle had a big deficit.

In fact, if you think about it, Tether easily earns billions of dollars a year just from the interest on the underlying government bonds. Circle made a profit of $1.7 billion last year.

They can make money without any effort. Motivated by this, they have no motive to do anything evil. On the contrary, they are the most eager to comply with regulations.

Now, this opaque black box will become a transparent white box.

In the past, people simply criticized Tether for having its money frozen by the United States. Now, it has been directly placed in a compliant U.S. custodian institution with high-frequency information disclosure, so people can rest assured.

[No need to worry about running away] is such a huge advantage - I think all Crypto people understand it.

Second, it is important to master the standards

Stablecoins were almost stolen by CBDC. No matter which country, if there is a central bank digital currency, it is most likely not built on the blockchain, but at most on some internal alliance chain of the central bank, which is meaningless to be honest.

When CBDC was at its hottest, it was also the most dangerous time for stablecoins.

If CBDC had been successful back then, the current stablecoins would have been infinitely suppressed into a dark corner, and blockchain would only play a minimal role.

The remaining half-dead stablecoins even have to learn the standards of the central bank's digital currency, and the right to speak on the standards is completely lost.

And now, stablecoins are winning (soon).

Instead, everyone should learn the [Blockchain + Token] standard.

Many blockchains now have no meaningful applications, except for stablecoin transfers. For example, Aptos, the only scenario I use Aptos is to transfer from Binance to OKX.

And now, stablecoins will be legislated, what does it mean?

That’s right, blockchain will become the only standard.

In the future, every stablecoin user must first learn how to use a wallet.

As an aside, I now think that Ethereum's push for EIP-7702 is really forward-looking. While other chains are flocking to memes, I am grateful that Ethereum is still sticking to account abstraction.

EIP-7702 is account abstraction, which can support, for example:

Use local currency to pay GAS

etc.

This will enable new users to use stablecoins in large quantities in the future, solving the last mile problem.

Third, deposits enter a new era

And once stablecoins are supported by legislation, deposits and withdrawals will become easier.

Let's imagine a scenario. Previously, due to the gray nature of stablecoins, there was no way to do it. But after the bill is passed, many traditional brokerages can support stablecoins themselves. The money of US stock investors can be turned into stablecoins in minutes, and then directly stuffed into Coinbase in one second. Do you believe it?

Let’s imagine another scenario. If the genius bill enters the House of Representatives and goes through the process smoothly, next, you will see:

Because the profits from this transaction are so lucrative, the existing stablecoin leaders and the new traditional giants have begun to frantically promote their stablecoin products.

An outsider started using stablecoins because of these promotions. Then one day he found that since the wallet account had been created, was it difficult to understand the Bitcoin in it?

Stablecoin is a huge Trojan horse. The moment you start using stablecoin, you have unknowingly stepped half a foot into the Crypto world.

Fourth, finally

As a large reservoir for digesting US debt, although stablecoins cannot directly convert debt into cash, they at least provide ammunition for the secondary market of US debt. These functions are quite important, and gradually, stablecoins have become a part of the US debt market. Therefore, once the US legislation is passed, it is impossible to cancel it after tasting the sweetness.

Moreover, we are also confident that stablecoins are indeed one of the great innovations in our industry, and it will be difficult for people who have used stablecoins to return to the traditional cash-banking system.

The bill cannot be reversed, and neither can the users. In the future, concerns will be cleared, standards will be mastered, and the era of large-scale gold entry seems to be imminent.