The ‘GENIUS Act’ shakes the power of @Tether_to and could change the world of Stablecoins forever. The cryptocurrency industry is entering a major turning point in history as Stablecoins are about to have official regulations through a law called the "GENIUS Act" or Guiding and Establishing National Innovation for U.S. Stablecoins. This is a significant matter that cannot be overlooked. Today, I will summarize it for you. 🧵👇
1/ The GENIUS Act addresses the crisis of confidence and the lack of legal clarity that has long eroded the Stablecoin market. The memory of the collapse of Terra-Luna or the incident where USDC deviated from its $1 value during the Silicon Valley Bank crisis are clear examples of the risks that arise when there is no stringent oversight.
2/The key points of this law are:
1. Focus on regulating Payment Stablecoins that are pegged to fiat currency and can be redeemed at a 1:1 ratio.
2. Algorithmic Stablecoins or those backed by other digital assets are not included in this law, which clearly indicates that this law aims to ensure safety through Stablecoin models backed by real assets that are considered to be more secure.
3/ This law clearly states that Payment Stablecoins are not "securities" or "commodities" and has specifically redefined them. This is considered a victory for the crypto industry. A clear legal recognition without being subjected to a century-old securities framework is a significant breakthrough and may serve as a model for laws that will apply to other digital assets in the future.
4/ This aligns with what Paul Atkins, the current chairman of the SEC, stated in a statement that we cannot apply old regulatory guidelines to newly emerging digital assets.
5/The company that benefits the most from this law is Circle, the issuer of the USDC stablecoin. The company's current model aligns almost entirely with the GENIUS Act, as it uses cash + short-term government bonds as collateral assets and undergoes regular audits. Following the news about this, Circle has exploded in growth, with its stock price soaring to $300, surpassing Coinbase's market cap.
6/Additionally, the GENIUS Act may push Tether's USDT, the number one stablecoin in the market and a direct competitor to USDC and Circle, out of the market in the United States. This law could require platforms or exchanges in the U.S. to use USDC and no longer be able to use USDT.
7/Other stablecoins like USDe or DAI may face significant challenges, as it must be acknowledged that the crypto market in the United States is very large, making the lack of regulation a risk of being banned or prohibited within the United States.
Summary: Even though the GENIUS Act has become law only in the United States, we must not forget that the fiat system we are using was also established by the U.S. Today, the big brother has begun to lay the groundwork that may become the foundation for stablecoins worldwide in the future. We need to keep an eye on whether this law will ultimately develop the crypto industry or hold it back with strict regulations.
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