Author: 0xTodd

If the U.S. stablecoin bill, the "GENIUS Act," passes smoothly, its significance will be monumental; I even think it could rank among the top five in Crypto history.

Although abbreviated as the GENIUS Act, which translates directly to "Genius Act," it actually stands for "Guiding and Establishing National Innovation for U.S. Stablecoins," meaning "Guiding and Establishing National Innovation for U.S. Stablecoins."

The proposal is lengthy, so here are a few key points summarized for everyone:

1. Mandatory 1:1 asset backing: This includes cash, bank demand deposits, and short-term U.S. Treasury bonds. Additionally, misappropriation and re-pledging are strictly prohibited.

2. High-frequency information disclosure: Reserve reports must be published at least once a month, with external audits introduced.

3. Issuance of licenses: Once the circulating market value of a stablecoin issuer exceeds $10 billion, they must transition to a federal regulatory framework within a specified timeframe, adopting banking-level regulation.

4. Introduction of custodianship: The custodians of stablecoins and their reserve assets must be regulated qualified financial institutions.

5. Clear definition as a payment medium: The bill explicitly defines stablecoins as a new type of payment medium, primarily subject to banking regulatory frameworks rather than securities or commodities regulations.

6. Amnestying existing stablecoins: There will be a maximum 18-month grace period after the bill takes effect, aimed at urging existing stablecoin issuers (like USDT, USDC, etc.) to obtain licenses or comply.

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Now that the main points are covered, let’s discuss the significance of this matter with excitement.

For many years, when asked what applications the Crypto industry has developed over the past 16 years, you can now confidently tell others—stablecoins.

First, clearing concerns is a prerequisite

Some people have held opposing views; in the past, the impression of stablecoins was that they were opaque black boxes. Every few months, there would be FUD—either Tether's assets were frozen, or Circle had a significant hole in its finances.

In fact, if you think about it, Tether easily earns billions of dollars a year just from the interest on those underlying Treasury bonds. Circle, slightly less, still made $1.7 billion in profit last year.

They are making money while standing still; from a motivational standpoint, they have no incentive to do harm; in fact, they are the ones most eager to comply.

Now, this opaque black box will turn into a transparent white box.

Previously, the only criticism was that Tether's funds might be frozen by the U.S.; now, they will be placed directly into U.S. compliant custodial institutions, with high-frequency information disclosure, allowing for peace of mind.

【No need to worry about running away】 is a significant advantage—I believe all Crypto people understand this.

Second, mastering standards is important

Stablecoins were once on the verge of being overshadowed by CBDCs. In any country, if there were to be a central bank digital currency, it would likely not be built on blockchain; at most, it would be on some internal consortium chain of the central bank, which honestly has no real significance.

When CBDCs were at their peak, it was the most dangerous time for stablecoins.

If CBDCs had succeeded back then, stablecoins would have been pushed into dark corners, and blockchain would have played a minimal role.

The remaining half-dead stablecoins would even have to learn the standards of central bank digital currencies, completely losing the power of standard-setting.

Now, stablecoins have won (or are about to).

Everyone will instead have to learn the standard of 【blockchain + Token】.

Currently, many blockchains have no meaningful applications, except for stablecoin transfers. For example, with Aptos, the only scenario I use it for is transferring between Binance and OKX.

Now that stablecoins will be legislated, what does this mean?

That's right, blockchain will become the only standard.

In the future, every stablecoin user will first need to learn how to use a wallet.

On a side note, I believe Ethereum's push for EIP-7702 is indeed somewhat forward-looking. While other chains are busy with memes, I appreciate that Ethereum is still committed to account abstraction.

EIP-7702 is account abstraction, which can support, for example:

• Social account registration for wallets
• Using local currency to pay for GAS
• And more

This provides a significant solution for new users to use stablecoins, addressing the last mile.

Third, entering a new era of deposits

Once stablecoins receive legislative support, deposits and withdrawals will become much simpler.

Let’s imagine a scenario: previously, due to the gray nature of stablecoins, it was impossible, but after the bill passes, many traditional brokerages can support stablecoins themselves. U.S. stock investors' money could instantly turn into stablecoins and then be directly deposited into Coinbase in a second—do you believe it?

Now, let’s imagine another scenario: if the GENIUS Act smoothly passes through the House of Representatives, you will see:

Because the profits from this trade are too lucrative, existing stablecoin leaders and new traditional giants will frantically start promoting their stablecoin products.

An outsider, due to this promotion, will begin using stablecoins. Then one day, they will realize that since the wallet account has already been created, how difficult can it be to learn about Bitcoin inside?

Stablecoins are a massive Trojan horse; the moment you start using stablecoins, you have unknowingly stepped halfway into the Crypto world.

Fourth, finally

As a major reservoir for digesting U.S. debt, while stablecoins cannot directly convert debt, they at least provide liquidity for the secondary market of U.S. debt. These functions are quite important, and gradually, stablecoins are becoming a part of the U.S. debt market's body. Therefore, once the U.S. legislates this, having tasted this sweetness, it will be impossible to go back and cancel it.

Moreover, we are confident that stablecoins are indeed one of the great innovations in our industry; those who have used stablecoins find it hard to return to the traditional cash-banking system.

The bill cannot go back, and users cannot go back. In the future, concerns will soon be cleared, standards will be mastered, and the era of large deposits seems to be imminent.

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