The U.S. Senate’s GENIUS Act, a pivotal piece of stablecoin regulation, is slated for a vote this week and is expected to become law within months, according to a Monday research report from Wall Street firm Bernstein.
Stablecoins are cryptocurrencies pegged to assets like the U.S. dollar or gold. They provide a key payment infrastructure in crypto markets and facilitate international money transfers.
Bernstein predicts that once the GENIUS Act is enacted, stablecoins will transform from serving as a crypto-specific money rail to becoming the money rail of the broader internet.
The full name of the legislation is the Guiding and Establishing National Innovation for U.S. Stablecoins Act. It aims to restore stablecoin innovation to the U.S., prioritizing regulated American issuers.
The act mandates federal oversight for stablecoins with market capitalizations above $10 billion, while allowing state-level regulation if aligned with federal standards. It classifies stablecoins as digital cash, aiming to promote their mainstream use in payments beyond their current role as settlement currency for digital assets.
Bernstein notes the act restricts non-financial public companies from issuing stablecoins, countering recent reports that major retailers like Amazon and Walmart were exploring direct stablecoin issuance. Instead, e-commerce and tech platforms seeking to adopt stablecoins will likely need to partner with regulated U.S. issuers.
For further context, Deutsche Bank anticipates stablecoins will go mainstream by 2025 following regulatory developments in the U.S.