If the stablecoin bill ‘GENIUS Act’ in the United States is successfully passed, its significance will be very great, to the extent that I even feel it could enter the top five in Crypto history.

Although abbreviated as GENIUS Act, the literal translation is ‘Genius Act,’ but it is actually the Guiding and Establishing National Innovation for U.S. Stablecoins, which translates to ‘Guiding and Establishing National Innovation for U.S. Stablecoins’.

The proposal is very long, with a few highlights to summarize for everyone:

1. Forced 1:1 full assets: including cash, demand deposits, and short-term US Treasury bonds. At the same time, misappropriation and re-pledging are strictly prohibited.
2. Frequent information disclosure: release a reserve report at least once a month, introducing external audits.
3. Licensing: Once the circulating market value of the issuer’s stablecoin exceeds $10 billion, it must be transferred to the federal regulatory system within the specified period and subjected to banking-level regulation.
4. Introducing custody: The custodian of stablecoins and their reserve assets must be a regulated and qualified financial institution.
5. Clearly defined as a medium of exchange: The bill clearly defines stablecoin as a new type of payment medium, primarily constrained by the banking regulatory system, rather than by securities or commodities regulatory systems.
6. Recruit and stabilize existing stablecoins: a buffer period of up to 18 months after the law takes effect, aimed at urging the issuers of existing stablecoins (such as USDT, USDC, etc.) to quickly obtain a license or comply.

The main story is finished, let’s talk about the significance of this matter with an excited heart.

Over the past 16 years, when others asked, what applications has your Crypto industry developed?

In the future, you can confidently talk to others about stablecoins.

First, clearing concerns is a prerequisite

Some people have held opposing views. In the past, people’s impression of stablecoins was an opaque black box. Every few months there is FUD, either Tether’s assets are frozen, or Circle has a big hole in its deficit.

In fact, if you think about it, Tether easily earns tens of billions of US dollars a year just relying on the interest of those underlying national debts. Circle also made a profit of $1.7 billion last year.

It is a way to make money while standing. In terms of motivation, they have no intention of doing any harm, but rather they are the most eager to comply.

Now, this opaque black box will become a transparent white box.

Previously, the only complaint was that Tether’s funds might have been frozen by the United States. Now they are directly placed into U.S. compliant custodian institutions, with high-frequency information disclosure, which can be trusted directly.

The advantage of ‘no need to worry about running away’ is so significant - especially I think all Crypto people understand.

Second, it is important to master the standards

Stablecoin, once almost won by CBDC. In any country, if there is a central bank digital currency, it is highly likely not built on blockchain, at most built on some internal alliance chain of the central bank, which to be honest, is meaningless.

When CBDC was at its peak, it was the most dangerous time for stablecoins.

If CBDC had succeeded back then, stablecoins would now be infinitely suppressed into the dark corners, and blockchain would only play a minimal role.

And the remaining stablecoins, which are half-dead and half-alive, even have to learn the standards of central bank digital currencies, with the standard discourse power completely sidelined.

And now, stablecoin wins (soon).

Instead, everyone needs to learn the standard of ‘blockchain + Token’.

Many blockchains now have applications that are actually meaningless, except for stablecoin transfers. For example, Aptos, the only scenario I use Aptos for is transferring between Binance and OKX.

And now, stablecoins will be legislated, what does this mean?

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

In the future, every stablecoin user should be the first to learn how to use a wallet.

On a side note, I now think that Ethereum’s push for EIP-7702 is actually quite forward-looking. While other chains are all about meme, thank you Ethereum for sticking to account abstraction.

EIP-7702 is an account abstraction, and it can support, for example:

Social account registration wallet

Pay GAS with this coin

Wait a moment

This solves the last mile problem for future new users to use stablecoins in large quantities.

Third, deposits enter a new era.

And once stablecoin receives legislative support, deposits and withdrawals will also become simpler.

Let’s imagine a scenario, previously hindered by the gray attributes of stablecoin, but after the bill is passed, many traditional brokerages can support stablecoin on their own. The money of US stock investors can turn into stablecoin in minutes, and then be directly deposited into Coinbase in a second, believe it or not.

Imagine another scenario, if the Genius Act enters the House of Representatives and goes through the process smoothly, next, you will see:

Because of the lucrative profits in this trade, existing stablecoin leaders and new entrants from traditional giants are crazily promoting their stablecoin products.

And an outsider, because of these promotions, started using stablecoins. And one day found, since the wallet accounts are all set up, is it difficult to understand the bitcoins inside?

Stablecoin is a huge Trojan horse. The moment you start using stablecoin, you have unknowingly stepped half a foot into the world of Crypto.

Fourth, finally

As a large reservoir for digesting US debt, although stablecoins cannot directly pay off debt, they at least provide ammunition for the secondary market of US debt. These functions are quite important, and slowly, stablecoins have become a part of the body of the US debt market. Therefore, once the United States passes legislation and tastes the sweetness of this, it is impossible to turn back.

And, we also have confidence, stablecoin is indeed one of the great innovations in our industry, people who have used stablecoins find it difficult to return to the traditional cash-bank system.

The bill cannot go back, and neither can the users. In the future, concerns will soon be cleared, standards will be mastered, and the era of large inflows seems to be imminent.

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