The Rejected Cryptocurrency Law in the US Has Been Changed: Here Is the Final Version! Provisions Affecting Tether Have Been Added!

The revised GENIUS Act (S.1582) bill in the US Senate stipulates that overseas-based stablecoin issuers must comply with American regulations when serving US users.

With this change, Tether, the world's largest stablecoin issuer, may be subject to U.S. legal regulations for the first time. Additionally, the law broadens the definition of digital asset service providers to include developers, validators (validator) nodes, and self-custody (self-custody) wallet providers. These groups may also have to comply with the Bank Secrecy Act (Bank Secrecy Act) and anti-money laundering (AML) laws.

This law could be a historic turning point for Tether, which has managed to evade criticism of transparency regarding its reserves by operating outside of regulation for nearly a decade. By expanding the scope of the types of assets behind stablecoins, the new bill also introduces some conveniences that could benefit companies like Tether. However, it is stated that the same bill may impose serious restrictions on the DeFi sector.

On Thursday, a vote was attempted to officially start a discussion in the Senate on the bill, but the vote failed due to some senators stating they had not yet read the text. The next day, a media outlet named Unchained reached the current version of the bill.

In the new proposal, the signatures of Democratic supporters Senator Kirsten Gillibrand and Angela Alsobrooks have been removed, while only the signatures of Republican sponsors Bill Hagerty, Tim Scott, Cynthia Lummis, and Dan Sullivan remain. It seems difficult for the bill to pass the Senate without Democratic support.

The changes in the updated version of the GENIUS Act are as follows:

• US Regulation for Foreign Exporters: The bill requires stablecoin issuers that operate outside of the US but serve US users to comply with US regulations. This provision directly affects Tether's position, which has long been outside of regulations.
• Expanded Definition of Digital Asset Service Provider: Now, not only exchanges but also DeFi protocol developers, validator nodes, and those offering their own wallet infrastructure are included under the regulation. These groups may also be held accountable for the use of illegal or unauthorized stablecoins.
• "Safe Harbor" Authority: The draft grants the Minister of Treasury limited "safe harbor" flexibility for small-scale or experimental projects. However, the unilateral intervention authority granted in "emergency" situations is criticized by some experts as it could excessively increase the powers of the executive.

It's not yet clear when Democratic senators will see the new version of the bill. However, the changes are believed to be the result of closed-door negotiations before the vote.

Experts predict that the Senate may hold a new vote to officially start discussions on the bill by the end of the month.