US stablecoin rules taking shape—here’s what they look like

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Finally, the long-overdue United States regulatory clarity on stablecoins is coming. The debate on the specifics rages on, but as of last week, we have two draft bills that give us some clues about how the rules will look.

Two competing stablecoin bills, the House STABLE bill and the Senate GENIUS bill, lay out similar but slightly different visions for stablecoin regulations in America.

The proposed bills follow President Donald Trump’s January 25th executive order, which prioritizes the growth of private, dollar-backed stablecoins while prohibiting the development of a central bank digital currency (CBDC).

What’s the difference between the House and Senate stablecoin bills?

The two stablecoin bills are more similar than they are different, but they deviate in a few key areas. Let’s break them down.

Regulators – The GENIUS bill allows states to regulate payment stablecoins up to $10 billion, while the Federal Reserve or Office of the Comptroller of the Currency (OCC) will regulate larger issuers. The STABLE bill allows issuers to opt out of federal regulation if state rules match the same standards.

Reserves – The STABLE bill allows bank balances, short-term Treasuries, short-term repos, and central bank reserves. The GENIUS bill allows these, as well as Money Market Funds and reverse repos.

Consumer Protection – The GENIUS bill relies on transparency and enforcement to keep things honest. The STABLE bill mandates one-to-one reserves and prohibits algorithmic stablecoins.

The two bills agree on several points: $100,000 per day fines for unapproved issuers, asset segregation, prohibition of comingling company and customer funds, and monthly auditing and reporting.

Whichever bill becomes the law will be comprehensive and, interestingly, will likely cause problems for the world’s largest stablecoin issuer by market cap.

What do the rules mean for Tether?

We’ve already seen how exchanges across the European Union are delisting USDT in response to the Markets in Crypto-Assets (MiCA) regulation. The requirements around transparency reporting, proving stablecoins are fully backed, and complying with anti-money laundering and know-your-customer (AML/KYC) rules spooked exchanges like Crypto.com.

Will the same thing happen in the U.S.? Possibly, depending on how the final stablecoin rules look. President Trump’s executive order emphasized that only legitimate and lawful stablecoins would be allowed to do business in America, and the two proposed bills both have strict reporting and reserve requirements. Both bills require monthly audits, meaning Tether’s attestations won’t be enough.

Whichever bill becomes law, the moment of truth is upon Tether. So far, it has refused to submit to a full audit, claiming that doing so would reveal its competitive advantage. It has also run afoul of several U.S. regulators, including the Commodities and Futures Trading Commission (CFTC) and the New York Attorney General (NYAG). In both cases, Tether paid substantial fines and was subsequently banned from New York.

Could Cantor Fitzgerald (NASDAQ: ZCFIIX) CEO turned United States Secretary of Commerce Howard Lutnick help? That’s unlikely; he has committed to divesting from all businesses in which he owns stakes to avoid potential conflicts of interest in his new role. That includes selling his 60% stake in Cantor Fitzgerald, which has a 5% stake in Tether.

Whatever fate Tether faces, it’s great to see regulatory clarity coming to the world’s largest economy. So far, stablecoins have been the killer app for blockchain technology, and firms being able to plan and execute with certainty can only be a good thing.

With Elon Musk exploring how blockchain can be used to create transparency and payment stablecoins getting a push, it’s only a matter of time before truly scalable blockchain solutions are required. This could be the beginning of a new golden age of blockchain utility, just as the BSV blockchain is ready for prime time.

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