TLDR
- The GENIUS Act signed into law on July 18 created the first federal framework for fiat-backed stablecoins in the United States
- Stablecoin market cap surged by nearly $4 billion in just seven days after the law passed, reaching over $264 billion
- Major banks including Bank of America, JPMorgan, and Citigroup are preparing to enter the stablecoin market
- The law requires stablecoins to be fully backed 1:1 by cash or short-term US Treasuries with monthly audits
- The SEC and CFTC are excluded from stablecoin oversight, with the OCC and Federal Reserve taking primary regulatory roles
The stablecoin market added nearly $4 billion in just seven days following the passage of the GENIUS Act on July 18. The landmark legislation created the first federal framework for fiat-backed stablecoins in the United States.
The law provides banks, asset managers, and institutional investors with clear rules for issuing stablecoins. This regulatory clarity removes the threat of enforcement actions from the Securities and Exchange Commission.
Major financial institutions wasted no time responding to the new opportunity. Bank of America CEO Brian Moynihan announced on July 16 that his bank is exploring dollar-backed stablecoin issuance.
JPMorgan and Citigroup confirmed they are also preparing to enter the market. Both banks cited the GENIUS Act’s regulatory framework as the catalyst for their plans.
The total stablecoin market capitalization climbed above $264 billion following the law’s passage. This represents one of the fastest growth periods in the sector’s history.
New Rules Create Two-Track System
The GENIUS Act establishes a dual regulatory structure for stablecoin issuers. Companies can obtain a federal charter or work with state regulators under approved programs.
State regulators can oversee issuers with less than $10 billion in circulation. Their programs must receive approval from a new federal Stablecoin Certification Review Committee.
The committee includes leaders from the Treasury, Federal Reserve, and FDIC. This structure allows smaller issuers to operate under potentially more flexible state rules.
All stablecoins must maintain full 1:1 backing with cash or short-term US Treasury securities. Issuers cannot lend out or reuse these reserves for other purposes.
Monthly audits by independent accounting firms are now mandatory. CEOs and CFOs must personally certify the accuracy of reserve reports.
The law explicitly states that payment stablecoins are not securities or commodities. This removes them from SEC and CFTC jurisdiction.
Traditional Finance Makes Its Move
Anchorage Digital launched a stablecoin issuance platform on Tuesday in partnership with Ethena Labs. The federally chartered crypto bank will bring Ethena’s USDtb stablecoin under the new regulatory framework.
WisdomTree became one of the first asset managers to enter the regulated stablecoin space. The Wall Street firm launched USDW, a dollar-backed stablecoin designed to enable dividend-paying tokenized assets.
Both products were specifically designed to comply with GENIUS Act standards. Their rapid launch suggests months of preparation before the law passed.
The market’s existing players face different challenges under the new rules. Tether, which controls the largest stablecoin USDT, must overhaul its reserve structure.
Circle’s USDC appears better positioned with reserves already mostly in cash and government debt. The company still needs to implement monthly certification requirements.
Decentralized stablecoins like DAI face the biggest hurdles. Their crypto-backed model doesn’t fit the law’s cash and Treasury bill requirements.
The post New US Stablecoin Law Pushes Market Cap Above $264 Billion appeared first on Blockonomi.
Source: https://blockonomi.com/new-us-stablecoin-law-pushes-market-cap-above-264-billion/
