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Opinion: The Genius Act Prioritizes Stablecoin Holders, and U.S. Banks May Foot the Bill

Opinion: The Genius Act Prioritizes Stablecoin Holders, and U.S. Banks May Foot the Bill

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ChaincatcherChaincatcher2025/07/11 16:48

According to ChainCatcher, citing a report from DL News, the "Genius Act" recently passed by the U.S. Senate is drawing attention from the banking and legal sectors. The bill grants stablecoin holders priority claims on the assets backing those coins in the event of bankruptcy, which could put traditional banks and other clients at risk.

Adam Levitin, a law professor at Georgetown University, warned that this arrangement essentially "subsidizes stablecoin issuers at the expense of bank depositors," potentially harming the interests of ordinary bank customers, especially if a stablecoin issuer or its custodian bank goes bankrupt. The current version of the bill requires stablecoins to be backed by highly liquid assets such as U.S. Treasury bonds, mandates monthly disclosure of reserves by issuers, and requires issuers to have the ability to freeze tokens. If passed, banks and other entities would be allowed to issue compliant stablecoins.

The bill is currently awaiting review by the U.S. House of Representatives. Although it aims to boost user confidence and strengthen the integration of stablecoins with the real-world financial system, its bankruptcy priority provisions have sparked discussions about regulatory logic, financial stability, and the potential redistribution of interests among banks. Some industry insiders believe the bill could mark a turning point for stablecoin development, while also intensifying concerns about its impact on the traditional financial system.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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