GENIUS Act Could Reshape U.S. Dollar Stablecoin Regulation, Says Circle
TLDR:
- Circle urges full backing of payment stablecoins with cash or liquid assets for consumer protection.
- Foreign stablecoin regimes should meet GENIUS standards to gain Treasury recognition.
- Rulemaking must treat all dollar-like tokens equally to prevent regulatory evasion.
- Issuers must maintain wind-down plans and clear penalties for compliance breaches.
Circle has submitted formal comments to the U.S. Department of the Treasury regarding the implementation of the GENIUS Act. The submission outlines recommendations to establish a uniform framework for U.S. dollar payment stablecoins.
According to Circle, this law provides a foundation for a federal digital payments system and clear rules for issuers. The company emphasized the importance of protecting consumers while maintaining market efficiency and innovation.
Circle’s Recommendations for GENIUS Act Implementation
Circle highlighted several key principles for Treasury’s rulemaking under the GENIUS Act.
First, all payment stablecoins should be fully backed by cash or high-quality liquid assets. These funds must remain separate from company money and be redeemable at par on demand.
Independent audits and plain-English reports were suggested to increase transparency and trust in these digital dollars.
The firm also called for reciprocal recognition of foreign regimes that meet GENIUS standards. Treasury’s criteria should ensure ongoing supervision and not rely solely on registration or light-touch models.
Circle stressed that this approach can create consistent treatment across borders and reinforce effective compliance. Published determinations would provide clarity for issuers operating internationally.
Another key principle is “same activity, same rules,” meaning all digital tokens resembling dollars should follow the same regulatory standards. Labels or marketing should not allow issuers to bypass safeguards.
Rulemaking should cover both domestic and foreign participants touching U.S. markets. This ensures consumers receive the same level of protection regardless of issuer origin.
Circle further recommended clear consequences and contingency planning for noncompliant actors. Penalties should be predictable while safe-harbor provisions protect good-faith efforts.
Issuers must maintain tested wind-down plans so customer funds remain secure, including across borders. These measures aim to prevent systemic risk and strengthen trust in digital payment systems.
Implications for U.S. Stablecoin Markets
The GENIUS Act provides a unique opportunity to unify standards and mitigate risks in core payment functions.
Clear definitions, risk-sensitive requirements, and reciprocal pathways for foreign issuers can support a competitive, compliant market. Circle stressed that implementation should avoid limiting liquidity management or interoperability with regulated financial infrastructure.
Proper supervision can guide demand toward transparent, fully reserved, compliance-anchored stablecoins.
Market observers note that consistent rules can reduce regulatory arbitrage and level the playing field for banks and nonbanks. Treasury’s adoption of these principles may influence U.S. leadership in digital finance.
Clarity in enforcement and reciprocity could drive broader adoption of dollar-backed stablecoins. Overall, Circle’s recommendations aim to balance consumer protection, operational efficiency, and international alignment.
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