Web3 Leaders See GENIUS Act Stifling Startups
President Donald Trump signed the GENIUS Act into law on July 18, ushering in the most comprehensive U.S. framework for stablecoins to date. While some in crypto view it as long-overdue clarity, others worry it may entrench incumbents and freeze out startups.
First the good news. Regulations are needed to make sure stablecoins are trustworthy, safe, and easy to understand for issuers who operate in a global market.
Arthur Breitman, Cofounder of Tezos (XTZ), said the one of the best things about the GENIUS Act is that it lays out a clear set of rules for U.S.-based dollar-linked stablecoin issuers. “And it also marks a sharp turning point with the U.S. administration embracing innovation rather than fighting it,” Breitman said.
He predicts the GENIUS act means we will likely see many more stablecoin issuers, “in particular from traditional finance.”
According to the law, traditional banks like Bank of America, for instance, must establish separate entities if they want to issue stablecoins. Also, the GENIUS Act does not protect your stablecoins, which are a digital currency, even if you got them at a BofA branch. The GENIUS Act establishes strict marketing standards for stablecoins, meaning no one can market them as being covered by FDIC insurance.
No Slam Dunk for Big Tech
The same applies for Big Tech companies like Meta Platforms (META), which had once dabbled in the stablecoin space. Like any traditional bank, tech companies wanting to issue stablecoins to create online market places must obtain clearance from a Treasury-led oversight committee with veto authority.
“I think its great how it keeps the Web2 giants from muscling their way into stablecoins,” said Shady El Damaty, CEO at the Holonym Foundation, the driving force behind Human.Tech – a cryptography-first identity and personhood platform that differentiates real people from artificial intelligence. “It would be a disaster for consumers and for competition if Apple or Meta issued their own stablecoin,” he said, alluding to the fact that their size would immediately …
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