The GENIUS Act seeks to regulate the growing stablecoin sector, which is presently valued at $238 billion. Under this legislation, stablecoins must be backed by safe, liquid assets, specifically U.S. Treasury bonds, to ensure stability. Historically, stablecoins like Tether and Terra have failed to maintain their $1 value, resulting in immense financial losses for various crypto firms. Pro-crypto lawmakers support this bill, and its passage has garnered approval from the crypto industry, indicating a commitment to creating a more stable financial environment amidst past failures.
The GENIUS Act intends to regulate stablecoins, tethering them to safe, liquid assets, primarily U.S. Treasury bonds, ensuring their stability against economic volatility.
Stablecoins have historically failed to maintain their dollar peg, leading to significant financial repercussions, including a liquidity crisis that adversely impacted major crypto firms.
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