GENIUS Act enforcement is seeing renewed interest on Capitol Hill, where a group of U.S. senators from both parties has requested that the Treasury Department ensure state regulators’ involvement in supervising stablecoin issuers. In their letter, the legislators point out that the GENIUS Act was created precisely to allow for some stablecoin businesses to be regulated by the states.
As mentioned in their letter addressed to Secretary Scott Bessent, the senators noted the significance of establishing an appropriate regulatory mechanism that would encourage states’ involvement as opposed to restricting it. As noted in the letter, Congress had always intended for the states to maintain their involvement in the burgeoning stablecoin industry.
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GENIUS Act Expands State Control Over Stablecoins
Under the GENIUS Act, any issuer of stablecoins valued at below $10 billion can be regulated at the state level if that state has similar legislation to federal law.
According to data from CoinGecko, there are only a few stablecoins that have crossed the mark of $10 billion, namely, Tether (USDT), USDC, and USDS. Therefore, most stablecoin projects can be regulated by states through the provisions of the GENIUS Act.
In their view, Congress deliberately included such a provision in order to preserve the dual banking system and to ensure that the important supervisory role of state banking organizations continues.
In addition, the lawmakers raised some reservations regarding the Treasury’s release this year on the execution of the GENIUS Act, which failed to make clear how the state would be certified to have the right to supervise stablecoin issuers.
Their main concern was that there was no clear direction in the guidelines. There was a concern that certain states would read the guidelines in such a way as to understand that there was only one chance to become certified.
The senators claimed that such an approach would not be reflective of how state legislatures worked, as legislative timeframes and deadlines vary in different states.
Senators Call for Flexible Certification Process
The letter encourages the Department of the Treasury to develop a flexible approach towards certification, such that when state governments are ready, they can request certification for implementing regulations according to the GENIUS Act.
The legislators noted that states must be able to regulate stablecoins in line with market demands and state processes. This strategy will promote participation, according to the legislators, while complying with the requirements of the federal government.
Republican Senators Bill Hagerty, Kevin Cramer, and Pete Ricketts, and Democratic Senators Kirsten Gillibrand, Angela Alsobrooks, and Catherine Cortez Masto were the signatories of this bipartisan letter.
Comments from the general public about the proposal put forth by the Treasury Department concluded on June 2. The outcome of this process will influence how the GENIUS Act is implemented throughout the country and the degree of power that the states will retain when overseeing the activities of stablecoin issuers.
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