The Genius Act gives stablecoin holders bankruptcy priority, which may increase the risk of the banking system

Odaily Planet Daily News The Genius Act passed by the US Senate is attracting attention from the financial and legal circles. The bill gives stablecoin holders priority claims to their backing assets in the event of bankruptcy, which is considered to have an adverse impact on traditional bank customers. Adam Levitin, a law professor at Georgetown University, pointed out that such arrangements are essentially "subsidizing the issuance of stablecoins at the expense of bank deposits", especially when the stablecoin issuer or its custodian bank goes bankrupt, which may erode the rights and interests of ordinary depositors. The current draft bill requires that stablecoins must be supported by highly liquid assets (such as US Treasury bonds), and issuers must disclose reserves monthly and have the ability to freeze tokens. If passed, banks and other institutions will be able to issue compliant stablecoins. Although the bill is intended to enhance user confidence and strengthen the connection between stablecoins and the real financial system, its bankruptcy priority arrangement has also triggered discussions on regulatory logic and financial stability. Some analysts believe that the bill may become a key node in the development of stablecoins, while exacerbating the structural impact on the traditional financial system. (DL News)