The recently passed GENIUS Act includes a key provision that prevents Big Tech companies from gaining control of the U.S. stablecoin market. Dante Disparte, Chief Strategy Officer at Circle, compared this to a modern-day “Libra clause”—a direct reference to Meta’s abandoned Diem project (formerly Libra). The law requires tech giants and large conglomerates to obtain special approvals before they can issue stablecoins, reducing the risk of monopolization.
Strict Conditions Apply to Banks Too
Traditional banks also face tight restrictions. To issue stablecoins, banks must create legally separate entities. These subsidiaries must avoid leveraging customer funds, can’t engage in lending, and must maintain a clean, reserve-backed balance sheet. Disparte pointed out that these conditions go even further than some prior proposals by banking giants like JPMorgan, which suggested using deposit tokens.
Protecting the Dollar and Market Integrity
Disparte emphasized that the Act boosts U.S. financial resilience by tightening stablecoin oversight. It ensures that all issuers operate under strict 1:1 reserve requirements using high-quality liquid assets—like U.S. Treasury bills. This approach not only enhances consumer protection but also strengthens the U.S. dollar’s standing in global finance.
No Interest-Bearing Stablecoins—For Now
One important restriction under the GENIUS Act is the ban on interest-bearing stablecoins. This decision aims to minimize systemic risk and prevent speculative schemes. However, this could unintentionally push users toward DeFi platforms, where they can still earn yield on their digital assets. The law may create a divide between regulated, “safe” stablecoins and more experimental decentralized alternatives.
Dual Regulation Structure
The law introduces a two-track regulatory path:
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State oversight for smaller issuers.
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Federal trust bank regulation for those handling more than $10 billion in issuance.
Regardless of the path, all issuers must meet transparency standards, publish monthly attestations, and guarantee full asset backing.
Final Thoughts
The GENIUS Act sets a clear boundary: it favors compliance, transparency, and financial stability over unchecked innovation. By restricting Big Tech and banks from dominating the space, the law opens the door for fintech-native firms to operate securely—under rules designed to protect both users and the broader economy.
