The GENIUS Act Prevents Big Tech Companies and Banks from Dominating Stablecoins: CEO of Circle

Dante Disparte of Circle stated that the GENIUS Act ensures that technology corporations and banks cannot dominate the stablecoin market without facing strict structural and regulatory barriers. "The GENIUS Act has what I would like to call — solely for my own benefit — a provision about Libra," Disparte said on the Unchained podcast on Saturday. Any non-bank organization that wants to issue a token pegged to the dollar must establish "an independent entity resembling Circle rather than a bank," overcoming antitrust barriers and facing a committee from the Treasury Department that has the power to veto the launch. Banks are also not exempt. Lenders issuing stablecoins must store it in a legally separate subsidiary and keep this amount on the balance sheet "no risk, no leverage, no lending," Disparte noted. That structure is even "more conservative" than the deposit token model that JPMorgan and other companies have implemented. "It creates clear rules which I think ultimately benefit the biggest beneficiaries, the American consumers, the market participants and frankly, it is the dollar," he added.

The GENIUS Act Passed With Support From Both Parties Passed last week with over 300 votes from the House, including support from 102 Democrats, the U.S. Stablecoin Innovation and Establishment Act (GENIUS) gives the dollar "rule-based" power in the global digital currency race, Disparte argues. He said: "Finally, cryptocurrency has achieved what it desires: legalization, a pathway towards legal and regulatory clarity in the United States and the opportunity to compete." This bill maintains the patchwork of state money transmission laws for issuers below the threshold of 10 billion dollars but requires a national trust bank charter when assets exceed that threshold. Notably, this law prohibits interest-bearing stablecoins, promotes strict disclosure standards, and imposes criminal penalties on unsecured "stable" tokens. Disparte stated that Terra-style experiments have "disappeared." However, critics argue that the yield ban could hinder consumer adoption and give an advantage to foreign issuers. Disparte suggests that yield "is an improvement in the secondary market" that is better implemented by decentralized finance protocols when the foundation is solid. DeFi Gains Advantage When GENIUS Bans Interest Rates The ban on profitable stablecoins from the GENIUS Act may redirect investor demand towards decentralized finance (DeFi) platforms based on Ethereum. According to analysts like Nic Puckrin and Christopher Perkins of CoinFund, with no more interest incentives from stablecoins, DeFi becomes the main choice for generating passive income on-chain, with those predicting that the "stablecoin summer" could now evolve into a "DeFi summer." This ban is particularly important for institutional investors. Unlike individual users, financial institutions have a fiduciary duty to generate profits, making profitable opportunities essential. Analysts believe this could lead to an increase in institutional capital flowing into DeFi, particularly Ethereum, which dominates the total value locked in this sector.