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Stablecoin Reform: GENIUS & CLARITY

Join us on July 24 for our CLE program, “Stablecoins in America: Regulation, Adoption and Institutional Growth,” where we will unpack the two pillars of the emerging U.S. stablecoin regime: the GENIUS Act and the CLARITY Act. The GENIUS Act establishes a bank‑grade prudential framework for dollar‑backed payment stablecoins: only insured depository institutions, their subsidiaries, or specially chartered non‑bank issuers could mint tokens; reserves must be maintained on a strict 1‑to‑1 basis in cash or short‑term Treasuries and verified by monthly attestations and annual CPA audits; and redemptions must clear within 24 hours. Supervision would rest with the Federal Reserve (umbrella oversight), the OCC (licensing non‑bank issuers), and the FDIC (resolution backstop), while robust BSA/AML compliance and FSOC systemic‑risk safeguards round out the statute. In short, GENIUS treats stablecoin issuance like a high‑quality, fully collateralized deposit substitute and pre‑empts conflicting state money‑transmitter rules for qualified issuers.

Complementing that issuance framework, the CLARITY Act modernizes market structure: it removes “permitted payment stablecoins” from the securities definition, yet adds Exchange Act §6A, explicitly authorizing SEC‑registered broker‑dealers, ATSs and exchanges to trade, broker and custody those tokens under tailored compliance rules. While exempt from registration as securities, stablecoin transactions remain subject to Exchange Act anti‑fraud provisions and must observe rigorous segregation, surveillance and disclosure standards. Issuers face Sarbanes‑Oxley‑style monthly reserve attestations, CEO/CFO certifications and annual audits, supplying transparency in lieu of SIPC protection (the Act clarifies stablecoins are neither “cash” nor “securities” for SIPC purposes). Together, GENIUS secures the safety and soundness of the tokens themselves, and CLARITY slots them into the capital‑markets plumbing, paving the way for broader institutional adoption—topics we will explore in depth during the July 24 session.

Tags

crypto, stable coin, genius act, clarity act, emerging technologies, fintech