Study Finds Most Stablecoins Fail GENIUS Act Requirements

Proposed federal regulations could soon force a massive shakeup in how stablecoins are backed, potentially impacting merchants who use crypto-linked payment rails or consumer financing tools. The Bank Policy Institute (BPI) recently found that the top 10 stablecoins—which represent nearly the entire market—mostly fail to meet the strict reserve requirements outlined in the GENIUS Act. For retailers, this means the 'digital dollars' you might accept or use for lower-cost settlement may not be as secure or compliant as previously thought. The GENIUS Act aims to ensure every digital dollar is backed by high-quality, liquid assets like Treasury bills or cash. Currently, many issuers hold riskier assets to boost their own profits. If this law passes, many popular stablecoins will have to either change their entire business model or face a ban from the U.S. financial system. This creates a reliability risk for any merchant currently exploring blockchain-based financing or payment programs. You should expect a period of volatility in the digital payment space as issuers scramble to meet these new transparency standards. Operators should verify the compliance roadmap of any fintech partner using stablecoins for transaction settlement before committing to long-term integration.

Source: PYMNTS

← Return to the library· Submit a correction