The GENIUS Act Reshapes the Global Stablecoin Landscape

The recently signed "GENIUS Act" in the United States marks the first formal establishment of a regulatory framework for digital stablecoins, which brings new challenges to many stablecoin issuing companies. This article will analyze the main content of the Act and its impact on stablecoins such as USDT.

Main Contents of the GEN Act

The full name of the "GENIUS Act" is the "Guidance and Establishment of a National Innovation Act for U.S. Stablecoins," which aims to establish a comprehensive legal and regulatory framework for payment stablecoins. The main content includes:

1. Core definition: Regulation of digital currencies used for payment or settlement that are pegged to a fixed currency value.

2. Regulatory Framework: Establish a dual-track regulatory system, applicable federal regulation for issuance exceeding $10 billion, and optional state regulation for amounts below $10 billion.

3. Reserve Requirements: 100% reserve is required, including coins and currency, bank deposits, short-term government bonds, etc.

4. Transparency requirements: Regular disclosure of stablecoin redemption procedures, outstanding stablecoins, and reserve composition.

5. Anti-Money Laundering Clause: Requires issuers to maintain anti-money laundering programs, monitor suspicious activities, etc.

Impact on USDT and Tether

The bill will severely restrict the development of USDT:

1. Tether is struggling to meet the 100% reserve requirement, currently having only about 85% in reserves.

2. Tether's auditing firm does not meet U.S. standards.

3. Need to sell non-compliant asset reserves, such as Bitcoin, precious metals, etc.

4. Difficult to support monthly periodic disclosures and strict anti-money laundering requirements.

If the requirements cannot be met, Tether will face:

• USDT is identified as an "illegal payment tool"
• Prohibit the issuance, sale, or provision of trading services within the United States.
• Daily maximum fine of 1 million USD

Differences with Hong Kong's Stablecoin Regulations

1. Issuer requirements: stricter restrictions in the US, more openness in Hong Kong.

2. Reserve asset requirements: The United States only allows cash and short-term government bonds, while Hong Kong requires consistency with the anchored currency.

3. Transparency requirements: The United States requires higher standards, necessitating audits by PCAOB certified institutions.

4. Penalty Severity: The penalties in the United States are harsher, with a maximum fine of $1 million per day.

Overall, Hong Kong's policies are more balanced between stability and innovation, while the United States places more emphasis on maintaining the dominance of the US dollar.

Future Outlook

Tether is facing a critical 300-day window period, during which the following situations may arise:

1. Choose the "offshore ecological niche" strategy to avoid harsh regulatory regions.

2. Unable to break through the regulatory bottleneck, it has been squeezed out of the mainstream market.

3. Maintain a "lukewarm" state, existing in specific scenarios.

The "GENIUS Act" and Hong Kong's "stablecoin regulations" both focus on protecting investors' rights. Although the regulatory details differ, they will both have a profound impact on the stablecoin market.