Summary
- Professor Adam Levitin noted that if the Genius Act passes, banks could have to shoulder the burden in case of stablecoin issuer bankruptcy.
- He stated that, under the current structure, if stablecoin reserves are held with banks, claim rights on those deposits could become unclear during bankruptcy, leading to legal and financial burdens.
- He further pointed out that if these risks are not addressed, banks’ participation in the stablecoin market could contract.
According to DL News, a digital asset (cryptocurrency) media outlet, on the 11th (local time), Adam Levitin, a professor at Georgetown University Law Center, pointed out that if the U.S. House passes the Senate's stablecoin regulation bill, the Genius Act, without amending key provisions, U.S. banks could be forced to absorb the burden in the event of a stablecoin issuer bankruptcy.
Professor Adam Levitin explained, "Under the current bill structure, if stablecoin reserves are deposited in banks, the claim rights to those deposits could become ambiguous if the issuer goes bankrupt," adding, "This could create a structure where, even though the Federal Deposit Insurance Corporation (FDIC) does not provide protection, banks would still assume legal and financial burdens."
He added, "If these risks are not resolved, banks' participation in the stablecoin market itself may shrink."
The Genius Act is the first comprehensive U.S. stablecoin regulation bill, including requirements for issuer eligibility, reserve holdings, and audit obligations.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
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