A range of major banking and financial companies are set to introduce their own cryptocurrency stablecoins backed by the US dollar following the signing of the GENIUS Act by President Trump on July 18, as per Reuters. The idea is that these institutions could leverage cryptocurrencies as an alternative payment method, using them especially for faster, convenient cross-border payments.
Over the 15+ years since the launch of Bitcoin, the first cryptocurrency, the US government has held the majority of cryptocurrencies at arm's length, with most politicians keen to highlight how their lack of regulation left a lot of potential for scams and criminal activity. However, the new Trump administration has been far more dovish on the medium, with top officials like President Trump himself netting hundreds of millions of dollars from his own memecoins.
On the legislative front, though, he's also pushing for greater acceptance of cryptocurrencies across a range of industries. As well as talking up a federal Bitcoin strategic reserve, he also signed the GENIUS Act into law, which outlined regulations for the use of stablecoins, and companies are jumping at the chance to take advantage.
However, the approval process is still lengthy, and companies will need to prove the need and use for their own stablecoin. For banks, this will be easier as they already incorporate know your customer (KYC) protocols for their existing product offerings, but non-banks may find the process more complicated. They'll need to acquire significant identifying information from customers before they can issue their own stablecoins and accept them as part of transactions.
"The intended use is going to matter a lot," said Stephen Aschettino, a partner at business-first legal firm Steptoe. "Is this something really designed to drive customers to engage with the issuer, or is the issuer's primary motivation to have a stablecoin that is more ubiquitous?"
Banks won't have a super-easy time adopting stablecoins either. While their path is clearer, they may need to adjust their calculations for liquidity if they hold stablecoins on their balance sheet. Even though they are tied to the US dollar, there have been instances of stablecoin collapse in the past. How that additional risk affects investors and stockholders is another potential hurdle.
Then there are the particulars of the currency itself. Which blockchain will it use, and how will the tokens be issued? Is the blockchain public and viewable by anyone, or private?
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With still many questions to answer, Reuters sources suggest that banks and institutions fully adopting stablecoins may still be years away, as the industry regulation is put in place to facilitate it.
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