The latest draft of the Guide and Establishment of the National Innovation for US StableCecoins (Genius) Act, which was introduced before a consultation on Tuesday, proposes a significant shift in the approach to stablecoin supervision.
The draft wants to divide the stablecoin regulation between state and federal authorities, while introducing new enforcement and transparency requirements for issuers.
Genius Act is sponsored by senators Bill Hagty (R-TN), Tim Scott (R-SC), chairman of the Senate Bank Committee, Kirsten Gillibrand (D-NY), Cynthia Lummis (R-WY) and Angela Alsobrooks (D-MD). It was first introduced by Hagty in February.
One of the most notable changes is the increased threshold of the state’s regulatory authority over stablecoins.
States would now be allowed to oversee StableCOin issuers in collaboration with federal authorities with a market share of up to $ 10 billion, giving them greater power in regulating a larger part of the stableecoin market.
The latest draft Bill also includes an exception process that allows greater issuers to remain exclusively under state monitoring if they meet specific criteria.
To get an exception and remain under state monitoring, stablecoin issuers must demonstrate strong capital, a good track record and be monitored by what the bills call an experienced state regulator.
The updated bill also introduces new transparency and information requirements for issuers. Issuers would be obliged to publish monthly liquidity reports describing the composition of their reserves, including the total number of stablecoins outstanding.
According to the latest version of the bill, reserves are required to be US currency, demand deposits, treasuries or other “approved assets.”
StableCOin issuers would also be obliged to create mechanisms that would allow them to comply with orders to freeze transactions and give the state secretary the authority to block and prohibit transactions involving stableecoins issued by foreign persons or units.
While earlier versions of the bill had provisions related to improved Know Your Customer (KYC) and Anti-Money-Hvid Laining (AML) requirements, designates the updated version of the bill explicitly stablecoin issuers as financial institutions for AML purposes requiring them to establish compliance programs and implement Due Diligence on High Wrap Transports.
The bill is now waiting for amendments from the Senate Bank Committee before a reference to the full Senate of debate and a final vote.
