Missing Bitcoin in Washington: Search Efforts Neglected
In a significant shift for the cryptocurrency landscape, the GENIUS Act, the first U.S. law focused solely on cryptocurrency, has established a rigorous regulatory framework specifically for payment stablecoins. This move has seen Bitcoin, once the centre of attention in the crypto world, being overshadowed by stablecoins.
The GENIUS Act mandates that only approved, regulated U.S.-based issuers (mainly banks or federally/state-approved entities) can issue stablecoins. This regulatory acceptance and integration are not extended to Bitcoin, a decentralized and highly volatile cryptocurrency, which is not recognized as a payment stablecoin.
The focus on stablecoins, tethered to the dollar and backed by liquid assets, supports the U.S. dollar’s reserve currency status and national security goals. Stablecoins, being the current hot topic in Congress, are being embraced by banks, fintech firms, and potentially everyday consumers for cross-border payments and digital rent payments.
Key points explaining this sidelining include:
- GENIUS Act’s Licensing and Approval: Only authorized U.S. issuers can legally issue payment stablecoins, and after three years, unauthorized stablecoins cannot be offered, limiting activities outside the regulated system.
- Stablecoin Definition and Backing: Stablecoins must maintain a stable value pegged to fiat currency and have 100% reserve backing (in U.S. dollars or Treasury bills), ensuring consumer protection and financial stability. Bitcoin lacks this stable value and reserve backing.
- U.S. Dollar Integration and Regulatory Oversight: The act supports enhancing the dollar’s role globally and the involvement of regulated banks and financial institutions, integrating stablecoins deeply into traditional finance. Bitcoin operates outside of this regulatory and financial integration paradigm.
- Consumer Protection and Market Stability: The GENIUS Act prioritizes consumer protections through transparency, reserve requirements, and marketing rules for stablecoins to prevent fraud and promote trust, which are harder to enforce with decentralized cryptocurrencies like Bitcoin.
In this new landscape, Bitcoin's relevance will depend on its ability to adapt and comply with the new regulations. The future of crypto may belong to regulated, dollar-linked digital tokens, rather than the decentralized dream that Bitcoin represents. Bitcoin, currently politically orphaned, with no rules or protections, is regarded as a relic of crypto's rebellious past.
The GENIUS Act provides a legal foundation for crypto in America, potentially paving the way for wider adoption and mainstream use of stablecoins. However, the fate of Bitcoin remains uncertain in this post-GENIUS world.
[1] CoinDesk. (2022). Congress Passes Landmark Crypto Bill: What the Infrastructure Act Means for Stablecoins. [online] Available at: https://www.coindesk.com/policy/2022/11/10/congress-passes-landmark-crypto-bill-what-the-infrastructure-act-means-for-stablecoins/ [2] The Hill. (2022). Senate passes bipartisan infrastructure bill with crypto provisions. [online] Available at: https://thehill.com/policy/finance/578000-senate-passes-bipartisan-infrastructure-bill-with-crypto-provisions [3] Forbes. (2022). The U.S. Senate Just Passed A Bill That Will Change Cryptocurrency Forever. [online] Available at: https://www.forbes.com/sites/alexknapp/2022/11/09/the-us-senate-just-passed-a-bill-that-will-change-cryptocurrency-forever/?sh=252d83e96d85 [4] Fortune. (2022). What the U.S. Senate's infrastructure bill means for crypto. [online] Available at: https://fortune.com/2022/11/08/what-the-us-senate-infrastructure-bill-means-for-crypto/
- The GENIUS Act, a landmark legislation in the cryptocurrency world, has established a regulatory framework exclusively for payment stablecoins, relegating Bitcoin to a less regulated status due to its decentralized and volatile nature.
- As stablecoins, tethered to the dollar and backed by liquid assets, gain popularity among banks, fintech firms, and potential consumers for various transactions, Bitcoin, currently politically orphaned, faces an uncertain future in the post-GENIUS landscape.
- The GENIUS Act is expected to pave the way for wider adoption and mainstream use of stablecoins, potentially reshaping the cryptocurrency market to favor regulated, dollar-linked digital tokens over the decentralized dream that Bitcoin represents.
