Genius Act (S. 394 – Guiding and Establishing National Innovation for US Stablecoins)

• Scope & Purpose: Creates a federal framework for “payment stablecoins”—digital tokens pegged to the U.S. dollar—with clear reserve, backing, licensing, and risk management standards
• Key Features:
  • 1:1 reserve requirement: Fully backed by U.S. dollars or high-quality liquid assets; monthly audits required
  • Regulatory tiers: Issuers under $10 billion cap can opt for state-level regulation; larger issuers fall under federal oversight
  • Exclusions & AML: Prohibits algorithmic stablecoins and restricts issuance by foreign entities unless compliant with U.S. law; includes anti-money laundering provisions
  • SEC Classification: Explicitly states that payment stablecoins are not securities or commodities
• Progress: Passed Senate Banking Committee (18–6) and cleared procedural votes; full Senate vote expected soon

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Clarity Act (House H.R. 4766 / Senate Discussion Draft)

• Scope & Purpose: Aimed at defining payment stablecoins by establishing use cases, permitted issuers, and regulatory responsibility, but with less detail on reserve standards compared to GENIUS
• Key Features:
  • Defines who qualifies as a payment stablecoin issuer—typically those tied to insured depository institutions or approved non-bank entities
  • Allocates state vs. federal oversight, though the specifics are usually less concrete than GENIUS.
  • Primarily focuses on regulatory definitions, reserving enforcement and stability standards for future rules.
• Progress: Advanced in House Financial Services Committee in summer 2023; Senate Banking Committee has yet to schedule a cloture or final vote