Preface
Since the TerraUSD (UST) collapse in 2022, the market share of algorithmic stablecoins has continued to decline. UST, as an algorithmic stablecoin, was not backed by any fiat currency or assets and relied solely on algorithms to maintain its peg to the US dollar. Once confidence collapses and the mechanism fails, a chain reaction occurs in the market. In contrast, fiat-pegged stablecoins backed by high-liquidity assets such as US dollars and US Treasury bonds (like USDT, USDC, USD 1) have gradually become the market mainstream. However, even these stablecoins are still subject to scrutiny regarding their compliance and transparency. To address this challenge, the United States has recently accelerated the promotion of the GENIUS Act, aimed at establishing a comprehensive regulatory framework for the stablecoin market.
I. GENIUS Stablecoin ActImportance of the FOR genius the Crypto Marketof The core of the GENIUS Act include key contents such as issuance qualification restrictions, reserve requirements, compliance obligations, user protectionections,, and international applicability. The specifically act clearly stipulates that issuers must fully support their issued stablecoins with equivalent high-liquidity assets, ensuring users can redeem at any time. To protect token holders' interests, if an issuing institution goes bankrupt, its assets should prioritize settling user funds. Additionally, issuers must strictly comply with anti-money laundering (AML) and counter-terrorist financing (CFT) obligations to prevent stablecoins from being used for illegal purposes. Overall Overall, the GENIUS Act can strengthen stablecoin regulation and safeguard user rights, the but in the short term term, the the act raises the threshold for stablecoin issuers, requiring existing issuers to modify their asset reserve structures and information disclosure mechanisms, which may bring high costs and operational challenges.
[The translation continues in the same manner for the rest of the document, maintaining the specified translations for specific terms like USD 1,eFi, etc.]Currently, collaborating with multiple DeFi protocols such as Venus Protocol, Aster, Meson Finance, and Falcon Finance, supporting USD 1 for trading, collateral, or liquidity assets. In terms of custody and liquidity services, BitGo is responsible for custody of reserve assets, and BitGo Prime provides institutional-level liquidity and trading services. DWF Labs has deployed multiple DeFi liquidity pools for USD 1 and subscribed to WLFI tokens worth $25 million. Additionally, in terms of crypto wallets and consumer scenarios, TokenPocket, HOT Wallet, Pundi X, and Umy have been integrated with USD 1 for payments, hotel bookings, and merchant settlements in Web3 scenarios.
USD 1 and Other Competitors
In terms of mechanism design, USD 1 has no significant differences from other mainstream stablecoins like USDT and USDC, all adopting a 1:1 US dollar asset reserve model, primarily supported by highly liquid assets such as US Treasury bonds and cash, and ensuring transparency and compliance through third-party custody and regular audits. However, USD 1's unique advantage lies in its powerful political brand effect. USD 1, issued by WLFI led by the Trump family, not only developed rapidly in the early stages but was also used in the $2 billion investment transaction between MGX, an Abu Dhabi investment institution, and Binance. This rapid growth is mainly due to the Trump family's public influence and political resources, enhancing market confidence in its compliance and credibility. It is worth noting that the previously launched $TRUMP token had significant price fluctuations, raising market doubts about its stability and long-term value. Such volatility may affect investors' confidence in USD 1, especially when considering the potential impact of political factors on the crypto asset market.
III. Future Development
The 'GENIUS Act' is not only a regulatory framework for stablecoins but also a strategic move by the United States to promote the issuance of compliant USD-anchored stablecoins, attract global capital to US Treasury bonds, restrict overseas issuers, and comprehensively strengthen the international dominance of digital dollars. These measures help prevent the recurrence of events like TerraUSD and enhance the overall safety and stability of the crypto market. In this context, stablecoin projects with strong compliance are expected to gain greater market recognition. For example, stablecoin projects like USD 1 with strong endorsements may occupy a more important position in the future crypto ecosystem as subsequent legislation progresses.
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