The recently passed GENIUS Act introduces stringent measures to prevent technology giants and major financial institutions from monopolizing the stablecoin sector, according to Circle's Chief Strategy Officer Dante Disparte. The legislation, which received bipartisan support, establishes significant structural and regulatory hurdles for non-bank entities entering the stablecoin space.

Key Provisions of the GENIUS Act

Disparte revealed that the legislation contains what he calls a "Libra clause" - requiring any non-banking entity issuing dollar-pegged tokens to establish a separate corporate structure similar to Circle's model. These entities must also pass antitrust reviews and obtain approval from a Treasury Department committee with veto authority.

For traditional banks, the Act mandates that stablecoin operations be housed in legally distinct subsidiaries with balance sheets that prohibit risk-taking activities. 【This structure exceeds】 the conservative nature of existing deposit-token proposals from major financial institutions like JPMorgan.

Impact on Market Competition

The legislation, passed with over 300 House votes last week, creates what Disparte describes as "rules-based" framework for dollar-denominated digital currencies. ——This represents a major step toward legitimizing crypto assets while maintaining competitive markets—— he emphasized during a recent podcast appearance.

Notably, the Act: • Bans interest-bearing stablecoins • Implements rigorous disclosure requirements • Introduces criminal penalties for unbacked tokens • Preserves state-level oversight for issuers below $10 billion in assets

DeFi Emerges as Unexpected Beneficiary

Analysts suggest the yield prohibition may redirect institutional investors toward decentralized finance platforms. With traditional stablecoins no longer offering returns, Ethereum-based DeFi protocols could see increased capital inflows as investors seek alternative yield-generating opportunities.

——The fiduciary obligations of institutional investors make this shift particularly significant—— noted Christopher Perkins of CoinFund. The development could potentially reignite the "DeFi summer" phenomenon observed in previous market cycles.

As the regulatory landscape evolves, industry observers will be watching how both traditional financial institutions and crypto-native companies adapt to these new constraints while maintaining innovation in the digital asset space.