Major retail giants Amazon and Walmart reportedly considering the release of their own digital currencies, dubbed as stablecoins.
In the rapidly evolving world of digital currency, two of the biggest names in e-commerce, Amazon and Walmart, are reportedly exploring the possibility of issuing their own stablecoins or using an existing one. This news comes at an awkward time for the ongoing Senate debate on the GENIUS Act stablecoin legislation.
The GENIUS Act, currently in the Senate, affects large listed non-financial companies, including Amazon and Walmart. The Act imposes strict regulatory requirements on stablecoins issued by these companies, primarily to ensure the safety and soundness of the U.S. banking system.
For non-financial companies to issue a payment stablecoin, they cannot do so unless they receive a unanimous vote of approval from the Stablecoin Certification Review Committee. This committee assesses whether the issuance poses no material risk to the U.S. banking system.
Only "permitted entities" under federal or approved state regimes can issue stablecoins. State regulatory frameworks must be certified as comparable to federal standards by the same committee chaired by the Treasury Secretary.
Stablecoins must be backed 1:1 with liquid, low-risk assets such as U.S. dollars or short-term Treasuries. Issuers must produce monthly reserve disclosures and undergo monthly third-party audits, with CEOs and CFOs certifying their accuracy under penalty of perjury.
Issuers must maintain clear redemption policies and the technical ability to freeze or burn stablecoins if legally required. They may not claim their stablecoins are legal tender, federally insured, or government-backed.
Issuers cannot use transaction data for targeted advertising or share it with non-affiliated parties without consent. Individuals with certain financial crime convictions are barred from serving as officers or directors of issuers.
The Committee is required to produce rules clarifying the application of this clause within a year of the passage of the legislation. The company must also avoid tying, which involves using market power in one sphere to force a partner or customer to use a second offering, such as a stablecoin.
Meanwhile, Republican Senator Josh Hawley has proposed a GENIUS Act amendment that appears to block social media platforms, search engines, communication platforms, and e-commerce marketplaces with more than 25 million users from launching a stablecoin.
On many blockchains, fees for transactions can be negligible compared to the approximately 2.9% charge for credit card transactions. The receipt of stablecoin funds can be almost instant, unlike credit card payments which have delays.
As the Senate debate continues, there could be some haggling over the weekend before the final GENIUS Act vote next week. Senator Warren has written to Meta asking if it is exploring the issuance of a stablecoin, and the company must respond within a week.
Expedia is another e-commerce giant considering a digital currency, joining Amazon and Walmart in the potential stablecoin race. However, under the GENIUS Act, these companies face significant regulatory hurdles before issuing stablecoins, including obtaining unanimous committee approval and complying with stringent reserve, disclosure, and operational requirements designed to protect financial stability and consumers.
- The GENIUS Act, currently under Senate debate, imposes stringent regulations on large listed non-financial companies, such as Amazon and Walmart, if they decide to issue stablecoins.
- For a non-financial company to issue a payment stablecoin, it requires a unanimous vote of approval from the Stablecoin Certification Review Committee, which assesses the potential risks to the U.S. banking system.
- Stablecoins must be backed significantly with liquid, low-risk assets like U.S. dollars or short-term Treasuries, and issuers must provide monthly reserve disclosures and undergo monthly third-party audits.
- Issuers are barred from using transaction data for targeted advertising or sharing it with non-affiliated parties without consent, and those with certain financial crime convictions are prohibited from serving as officers or directors.
- Republican Senator Josh Hawley has proposed an amendment to the GENIUS Act that blocks social media platforms, search engines, communication platforms, and e-commerce marketplaces with more than 25 million users from launching a stablecoin.
