The U.S. government's latest cryptocurrency policy framework has realigned with its "support for innovation and development" ethos. The Stablecoin GENIUS Act underscores America's ambition to dominate the global stablecoin market by ensuring both USD-denominated stablecoins and U.S.-based issuers lead the sector.
Key Provisions of the Stablecoin GENIUS Act
1. Localization of Issuers
The bill mandates that "payment stablecoins" must be issued by U.S.-registered entities, categorized as:
- Subsidiaries of insured depository institutions.
- Federally approved non-bank entities.
- State-approved issuers.
Foreign issuers face stringent entry barriers, including OCC registration and compliance with reciprocal policies favoring U.S. issuers abroad.
2. Dollar-Denominated Reserve Assets
Stablecoins must be 100% backed by USD or high-liquidity assets like:
- Cash reserves.
- Short-term U.S. Treasuries.
- Repurchase agreements.
This reinforces the "USD–stablecoin–U.S. debt" financial cycle, with major issuers like Tether and Circle already holding over 80% of reserves in U.S. Treasuries.
3. Dual-Tier Licensing
- State-level: For issuers under $10B in circulation.
- Federal-level: For larger issuers (>$10B), overseen by the OCC or Federal Reserve.
This fosters innovation while maintaining oversight, though compliance costs for multi-state operations remain high.
4. Integration with Traditional Finance
The bill encourages banks and payment firms to issue stablecoins, accelerating partnerships like:
- PayPal and Stripe’s stablecoin payments.
- JPMorgan’s JPM Coin and regional bank consortiums exploring joint stablecoins.
5. Tech-Driven Compliance
Issuers must demonstrate capabilities to:
- Freeze or destroy tokens under regulatory orders.
- Adhere to anti-money laundering (AML) standards, with FinCEN developing tools to monitor illicit activities.
Global Trends and China’s Strategic Response
International Shift
Over 15 countries, including the UK, Australia, and South Korea, are advancing stablecoin legislation, focusing on how (not whether) to regulate them. The EU’s MiCA and Hong Kong’s Stablecoin Ordinance exemplify this trend.
Recommendations for China
- Clarify Stablecoin’s Role: Assess its relationship with CBDCs, RMB internationalization, and cross-border finance.
Pilot Offshore RMB Stablecoins: Launch trials in Hong Kong, leveraging its:
- Established RMB liquidity.
- Robust regulatory framework under the Stablecoin Ordinance.
- Phased Expansion: Progress from Hong Kong to mainland free-trade zones, enhancing RMB’s global utility.
👉 Explore how global stablecoins are reshaping finance
FAQs
Q: Why does the U.S. prioritize USD-backed stablecoins?
A: To solidify dollar dominance in digital finance, ensuring global transactions default to USD liquidity.
Q: How might China’s approach differ?
A: By piloting offshore RMB stablecoins first, China mitigates domestic risks while testing international demand.
Q: What’s the biggest challenge for stablecoin issuers?
A: Balancing innovation with compliance costs—especially under multi-jurisdictional licensing.
The Stablecoin GENIUS Act reflects a strategic blend of innovation control and dollar hegemony. For China, the path lies in pragmatic, incremental adoption—turning stablecoins into levers for RMB globalization.