US regulators are working to finalise a comprehensive legal framework to govern the crypto sector.
US' stablecoin-focussed GENIUS bill expected to be on the Senate's floor this week
Photo Credit: Unsplash/ Dima Solomin
Meta has reportedly been exploring the use of stablecoins for international payouts, but the firm may face regulatory challenges in the US. Over the weekend, US Senator Elizabeth Warren snubbed the idea of letting Big Tech companies dive too deep into the stablecoin sector. In an interview with CoinDesk, Warren said that Big Tech's introduction of stablecoin transactions could “choke off small businesses from the payments system.” The Senator from Massachusetts serves as a senior Democrat on the Senate Banking Committee and has consistently pushed for stronger rules to govern the crypto sector.
At present, a committee of US regulators is working to finalise a comprehensive legal framework to govern cryptocurrencies. Among the various crypto-related proposals being mulled over, a stablecoin-focussed bill is also circulating among policymakers. This bill is dubbed “GENIUS” — the Guiding and Establishing National Innovation for US Stablecoins act.
Given that USD-pegged stablecoins maintain a 1:1 value ratio with the fiat currency, they could effectively be regarded as digital equivalents to the US dollar. Warren said in her interview that the GENIUS bill should prevent large corporations from releasing their own versions of the USD. She added that Meta CEO Mark Zuckerberg must explain if his stablecoin plans were “another attempt to control the American people's money.”
“The Senate must fix the GENIUS Act so it prohibits Big Tech companies and other commercial giants from owning or affiliating with stablecoin companies. No Senator should vote to make it easier for Big Tech to pry into our financial transactions,” Warren told CoinDesk.
Last week, a Fortune report claimed Meta was exploring the use of stablecoins to manage payouts for international creators. Citing sources familiar with the matter, the report said Meta was already in preliminary discussions with some crypto firms to implement this strategy.
As part of its plans, the social networking giant may integrate stablecoins with Instagram to facilitate payouts of up to $100 (roughly Rs. 8,550) to its community of international creators.
Through stablecoins, Meta expects to dodge the higher processing fee levied on other payment modes like wire transfers of fiat currencies. Meta has neither confirmed nor denied the report yet.
In April this year, the US Senate Committee on Banking, Housing, and Urban Affairs published a fact sheet detailing key aspects of the GENIUS bill. It said the bill would mandate certain requirements on stablecoin issuers, improving the Treasury Department's ability to monitor compliance of sanction orders.
The bill proposes to classify stablecoin issuers as financial institutions under the oversight of the Bank Secrecy Act. For this, stablecoin firms will have to maintain effective anti-money laundering rules, risk assessment guidelines, and hire compliance officers. Firms will also have to maintain transaction records of stablecoins and report suspicious activities.
Furthermore, the document directs stablecoin issuers to retain the ability to freeze and burn wallets to comply with legal orders.
As per the CoinDesk report, the GENIUS bill is expected to surface on the Senate floor this week.
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