The recent GENIUS stablecoin legislation appears to be a cleverly disguised effort to implement central bank digital currency (CBDC) regulations through privatized channels, as stated by Jean Rausis, co-founder of the Smardex decentralized trading platform.
In remarks shared with Cointelegraph, Rausis suggested that the US government is poised to penalize stablecoin providers that fail to adhere to the new regulations, mirroring the European Union’s Markets in Crypto-Assets (MiCA) framework. He elaborated:
“The government understands that by controlling stablecoins, it can oversee financial transactions. Partnering with centralized stablecoin providers allows them to freeze assets at any moment — effectively replicating a CBDC’s capabilities. So, why go through the trouble of establishing a CBDC?”
“With stablecoins falling under governmental oversight, the outcome remains unchanged, with only a misleading sense of decentralization as an added feature,” he continued.
Rausis concluded that decentralized alternatives, such as algorithmic stablecoins and synthetic dollars, will serve as a crucial defense against this escalating government intervention in the crypto space.
First page of the GENIUS Act. Source: United States Senate
Related: America must support pro-stablecoin regulations, reject CBDCs — US Rep. Emmer
Revised GENIUS bill to feature stricter regulations
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, introduced by Senator Bill Hagerty of Tennessee on February 4, proposed a detailed structure for overcollateralized stablecoins like Tether’s USDt (USDT) and Circle’s USDC (USDC).
The act was revised on March 13 to incorporate tougher Anti-Money Laundering regulations, reserve requirements, liquidity provisions, and sanctions checks.
These added stipulations will likely provide US-based stablecoin issuers with a competitive advantage over their offshore rivals.
At the recent White House Crypto Summit, US Treasury Secretary Scott Bessent mentioned that the United States intends to utilize stablecoins to maintain US dollar dominance in transactions and safeguard its status as the global reserve currency.
Largest holders of US government debt. Source: Peter Ryan
Centralized stablecoin providers depend on US bank deposits and short-term cash equivalents, such as US Treasury bonds, to support their digital fiat tokens, which increases the demand for the US dollar and US debt securities.
Collectively, stablecoin issuers hold over $120 billion in US debt, making them the 18th largest holder of US government debt globally.
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