New Regulatory Landscape for Stablecoins: How the GENIUS Act Reshapes the Global Stablecoin Market

The United States has officially established a regulatory framework for digital stablecoins, marking a new challenge for stablecoin issuers. The "GENIUS Act" ("Guidance and Establishment of a National Stablecoin Innovation Act") aims to create a comprehensive legal and regulatory system for payment stablecoins to promote financial innovation, protect consumers, strengthen monetary sovereignty, and maintain financial stability.

Main Content of the GEN Act

The bill regulates the issuance of stablecoins for payments, requiring that only approved issuers can issue stablecoins in the United States. The bill establishes a dual regulatory system: federal regulation applies to issuances exceeding $10 billion, while a state regulatory path is available for those below $10 billion.

The bill requires 100% reserves, and issuers must hold at least one dollar of licensed reserves for every dollar of stablecoin issued. Licensed reserves include coins and currency, bank deposits, short-term government bonds, repurchase agreements, money market funds, central bank reserve deposits, etc.

Issuers are required to regularly disclose the stablecoin redemption procedures, outstanding stablecoins, and reserve composition. The bill will also classify stablecoin issuers as financial institutions under the Bank Secrecy Act, requiring them to establish anti-money laundering and sanctions compliance programs.

The Impact on USDT and Tether Company

USDT is one of the most representative stablecoins in the cryptocurrency market. This bill will severely restrict the development of USDT, and Tether will find it difficult to fully meet compliance requirements. The main reasons include:

1. The current reserves of USDT are less than 100%, which does not meet the legal standards.

2. The auditing firm of Tether does not meet the standards of the Public Company Accounting Oversight Board in the United States.

3. Need to sell non-compliant asset reserves, such as Bitcoin, precious metals, corporate notes, etc.

4. Difficulty in supporting monthly regular disclosures and strict anti-money laundering requirements.

If Tether fails to meet the requirements, it will face severe penalties. USDT may be deemed an "illegal payment instrument," and Tether may be prohibited from issuing, selling, or providing trading services within the United States, and may face hefty fines.

Differences with Hong Kong's Stablecoin Regulations

Hong Kong will implement the "Stablecoin Regulation" on August 1, 2025. The regulations in the two regions differ in the following aspects:

1. The admission requirements for issuers differ. The United States requires entities to be registered in the U.S. or foreign entities registered through the OCC, while Hong Kong allows companies registered in Hong Kong or recognized overseas banks.

2. The requirements for reserve assets are different. The United States only allows cash and short-term U.S. Treasury bonds, while Hong Kong requires strict consistency with the pegged currency.

3. The standards for transparency and auditing differ. The US requires PCAOB-certified firms to conduct annual audits, while Hong Kong only requires "independent audits."

4. The punishment for illegal activities varies. The penalties in the United States are stricter, with a maximum fine of $1 million per day.

Overall, Hong Kong's policies are more inclusive, while the United States focuses more on maintaining the dollar's hegemony.

Future Outlook

The "GENIUS Act" sets a critical window period for Tether. If it fails to pass U.S. compliance, the global market share expansion of USDT will be restricted. The following situations may arise in the future:

1. Tether adopts an "offshore ecological niche" strategy to avoid strictly regulated areas.

2. Risks arising from the loss of market trust are squeezed by other compliant stablecoins.

3. Maintain a "lukewarm" state, existing in specific scenarios but difficult to regain a dominant position.

Overall, the "GENIUS Act" and Hong Kong's "Stablecoin Regulation" both focus on regulating the issuance of stablecoins, ensuring investor rights through a redemption system and mandatory disclosure requirements. Although the details differ, both aim to provide strict protection for investors.