Moria Money vs. The Genius Act | Implications for Stablecoins in 2025
Edited By
Oliver Brown
A recently introduced bipartisan bill, the Genius Act, aims to reshape the landscape for payment stablecoins like MUSD. This legislation raises questions about compliance for decentralized currencies, sparking debates within the Bitcoin Cash community.
Overview of MUSD
MUSD, a stablecoin developed by Riften Labs, operates on the Bitcoin Cash blockchain via the Moria Protocol. Here’s what you need to know about it:
Decentralized Design: MUSD utilizes the CashTokens system to maintain stability, requiring users to deposit BCH as collateral, which ensures an over-collateralized model.
Transparency: Unlike many centralized competitors, MUSD runs on an open-source codebase.
Market Traction: Following its launch, MUSD managed to lock in over $45,000 in total value, indicating strong early interest in the BCH community.
Despite this, some community members oppose its USD peg, questioning its alignment with cryptocurrency's decentralized principles.
Examining the Genius Act
The Genius Act proposes a framework for regulating payment stablecoins, highlighting crucial aspects such as:
Definition of Payment Stablecoin: Clearly outlines what constitutes a payment stablecoin, focusing on their obligation to redeem at par value.
Licensing and Oversight: Requires issuers to become permitted payment stablecoin issuers (PPSIs), introducing federal or state oversight based on size.
Reserve Requirements: Mandates that issuers maintain reserves at a 1:1 ratio with liquid assets, complicating the situation for decentralized models like MUSD.
Current Status & Support
As of May 18, 2025, the Genius Act passed the Senate Banking Committee with bipartisan support. The bill is anticipated to reach a full Senate vote soon under President Trump's administration, which favors digital innovation.
Impact on MUSD
Given its model and the new regulations, MUSD's future hangs in the balance:
Classification as Payment Stablecoin: MUSD likely falls under the bill's definition, necessitating compliance with its regulations.
Licensing Requirements: Riften Labs may need to apply for PPSI status, facing challenges if it remains below the $10 billion threshold for federal oversight.
Compliance Possibilities: Its design, currently backed by BCH, may clash with the 1:1 reserve requirement focusing on fiat currencies.
"This sets a dangerous precedent for decentralization in the crypto world." - Concerned community member
Compliance Challenges
Reserve Requirements: MUSD might be forced to alter its collateral strategy to incorporate liquid assets like Treasuries, undermining its decentralized ethos.
Financial Oversight: The Act demands strict audits and public disclosures that could burden Riften Labs with operational complexities.
Consumer Protections: With the Act's emphasis on redemption rights, MUSD's volatile nature could lead to challenges in guaranteeing stability during BCH market swings.
Market Access Risks
If Riften Labs fails to comply, MUSD could face restrictions on its market activities, limiting its function as a payment solution. Critics emphasize that the bill may favor larger, centralized players who can cope with compliance costs.
Community Feedback and Concerns
The BCH community is split on the implications:
Some users argue policies aligning with USD could threaten the free nature of cryptocurrencies.
Others believe regulatory clarity may enhance MUSD's credibility among conservative merchants.
Key Insights
🔹 The Genius Act’s definition clearly classifies MUSD as a payment stablecoin.
🔹 Over $45,000 in value locked signals community endorsement despite concerns.
🔹 "Compliance could boost credibility, but at what cost?" - Critical voice in the community.
Overall, the potential regulation could define MUSD's path ahead significantly, navigating between innovation and compliance. As the Senate deliberates, stakeholders eagerly await further developments.
Predicting the Path Ahead for MUSD
There’s a strong chance that as discussions progress, MUSD will have to adapt significantly if it hopes to survive the Genius Act's regulatory landscape. Experts estimate around a 70% likelihood that Riften Labs will pursue PPSI status to comply with the new measures. However, this comes with complications; maintaining 1:1 reserves with liquid assets could force them to alter the foundational stability provided by BCH. If they choose to resist compliance, they face potential market restrictions, with experts suggesting a 50% chance of diminished market access. The BCH community remains divided, and the outcomes could pivot based on ongoing dialogue between decentralized advocates and regulatory supporters.
Historical Echoes from an Unexpected Source
Looking back to the late 2000s, the rapid rise of peer-to-peer file-sharing networks sparked similar tensions between innovation and regulation. Just as artists and content creators debated the merits of decentralized access versus potential piracy, cryptocurrency communities now face an intricate battle between maintaining decentralized ideals and adhering to newfound regulations. The fallout from that era reshaped industries—from music to film—forcing many to rethink their approaches. Like those artists harnessing streaming platforms, confronting the Genius Act could prompt MUSD to reconsider its fundamental principles to ensure its longevity in an ever-evolving market.