GENIUS Act ‘legitimizes’ stablecoins for global institutional adoption

Stablecoin adoption among institutions could surge as the United States Senate prepares to debate a key piece of legislation aimed at regulating the sector. After failing to gain support from key Democrats on May 8, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act passed the US Senate in a 6632 procedural vote on May 20 and is now heading to a debate on the Senate floor.The bill seeks to set clear rules for stablecoin collateralization and mandate compliance with Anti-Money Laundering laws.Related: German govt missed out on $2.3B profit after selling Bitcoin at $57KThis act doesnt just regulate stablecoins, it legitimizes them, said Andrei Grachev, managing partner at DWF Labs and Falcon Finance.It sets clear rules, and with clarity comes confidence. Thats what institutions have been waiting for, Grachev told Cointelegraph during the Chain Reaction daily X spaces show on May 20, adding:Stablecoins arent a crypto experiment anymore. Theyre a better form of money. Faster, simpler, and more transparent than fiat. Its only a matter of time before they become the default.Source: CointelegraphSenate bill seen as path to unified digital systemThe GENIUS Act may be the first step toward establishing a unified digital financial system which is borderless, programmable and efficient, Grachev said, adding:When the US moves on stablecoin policy, the world watches.Republican Senator Cynthia Lummis, a co-sponsor of the bill, also pointed to Memorial Day as a fair target for its potential passage. Grachev said regulatory clarity alone will not drive institutional adoption. Products offering stable and predictable yield will also be necessary. Falcon Finance is currently developing a synthetic yield-bearing dollar product designed for this market, he noted.Yield-bearing stablecoins issuance. Source: PendleYield-bearing stablecoins now represent 4.5% of the total stablecoin market after rising to $11 billion in total circulation, Cointelegraph reported on May 21.Related: Stablecoins seen as ideal fit for real-time collateral managementGENIUS Act regulatory gaps dont address offshore stablecoin issuersDespite broad support for the GENIUS Act, some critics say the legislation does not go far enough. Vugar Usi Zade, the chief operating officer at Bitget exchange, told Cointelegraph that the bill doesnt fully address offshore stablecoin issuers like Tether, which continue to play an outsized role in global liquidity.He added that US-based issuers will now face steeper costs, likely accelerating consolidation across the market and favoring well-resourced players that can meet the new thresholds.Still, Zade acknowledged that the legislation could bring greater stability to regulated offerings, depending on how it is ultimately worded and enforced. loading="lazy">Magazine: Crypto wanted to overthrow banks, now its becoming them in stablecoin fight