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- The revised GENIUS Act targets foreign stablecoin issuers serving U.S. users.
- New definitions expand regulatory reach to DeFi developers and wallet providers.
- The bill remains politically divided, limiting its chances of immediate progress.
A revised version of the GENIUS Act (S. 1582) has introduced sweeping changes that could reshape the U.S. stablecoin landscape. For years, issuers like Tether have operated without direct oversight by U.S. regulators.
That can now be changing. The new bill extends U.S. jurisdictional laws to cover non-U.S. issuers that make available services in America. Tether and similar companies would therefore have to subject themselves to U.S. requirements, including offering proof of reserves and abiding by financial guidelines.
This is one in a transformation in the approach of legislation in governing worldwide digital finance. The shift has come as money laundering, fraud, and market manipulation have been increasingly raising fears lately. The new requirements weed out uncertainty for stablecoin behemoths but complicate compliance.
Tether Use Raises Legal Risks Under New Bill
The legislation’s new language doesn’t stop at issuers. The new definition extends to who qualifies as a digital asset service provider. Developers, validator nodes, and wallet providers are all under its umbrella in the new legislation.
This may motivate many actors in decentralized finance (DeFi) to register and comply with the Bank Secrecy Act. DeFi protocols have long asserted neutrality as open software platforms. That argument might no longer cut it.
If they help process transactions for unauthorized stablecoins, they risk facing legal repercussions. The transition would trigger tension throughout the crypto ecosystem, particularly among projects that stress decentralization and anonymity.
Crypto Industry Weighs In on Bill’s Impact
In spite of the bill’s firmly regulationist approach, political obstacles are still in place. The new version lost its two Democratic co-sponsors and is now sponsored by Republicans alone. The question is raised about its future course in an equally divided Senate.
Although some anticipate eventual bipartisanship, an initial shortage of balance compels legislative activity into the future. A new provision gives some safe harbor discretion to the Treasury Secretary, though limited. This offers flexibility for smaller projects but enables crisis unilateral actions as well.
Several critics fear that this would situate too much authority in the executive branch. Despite no formal vote being called yet, some are anticipating movement before the month’s end. The crypto community has time for now to review the bill and its effect, and express concerns.
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