In most cases this will be determined by the robustness of the chain's transaction fee mechanism and the diversity of the software implementation (we refer to the latter as client diversity). Is downtime acceptable? If a blockchain network goes down, how do we agree on the correct version of the ledger to start with when we 'reboot' the network? In the event of open, permissionless ledger downtime, there are few options we can fallback on from the centralized ledger downtime playbook.

What development standards should we hold permitted issuers to? What standards should we maintain for partners who integrate the issuer's technology, and vice-versa? What happens to reserve assets when there is a significant loss of onchain customer funds due to a security lapse? Let's say a notorious hacking group gains access to an onchain application holding a significant amount of customer stablecoins. The issuer can (and might be required by law to) freeze the stablecoins. What happens to the reserve assets?

Which banking laws must permitted issuers enforce, and whom do they enforce them on? What is the definition of the permitted issuer's 'customers', and what rights do those customers have? For example, can the issuer revoke a customer's onchain USD as they please? Or, does it require a justifiable cause? What if the customer is not an American citizen?

Why shouldn't the issuer be allowed to invest customer funds within the rules set forth in current banking regulations?

How about onchain funds? Section 10, Custody of Payment Stablecoin Reserve and Collateral presumably prevents onchain funds from being commingled or managed by the issuer. However, what if depositors agree to commingling funds for investment purposes? Consider the below scenario:

A group of wealthy people obtain a stablecoin issuer license from the relevant authority. The members funds are used to purchase allowed reserve assets, like treasury bills. The members all agree to allow for their stablecoin funds to be commingled onchain. The credit union mints stablecoins on Ethereum to an omnibus smart contract account that is capable of maintaining proper customer accounting, but whose stablecoins in the contract are collectively held. Importantly, the credit union’s own funds are not placed in the contract account. The credit union deposits the smart contract's stablecoin balance in Aave as collateral, and earns yield. The credit union then keeps the yield from reserve assets and from Aave. They pay members substantial dividends throughout the year from the credit union earnings.

What have they accomplished? They have managed to earn offchain risk free rate + onchain risk free rate, assuming Aave is as close as we can get to onchain-contract-based risk free rates.

The objective of current stablecoin legislation appears to be to clearly define regulatory responsibility, and the acceptable asset/liability risk profile of reserve assets. That seems like the natural place to start if your body of knowledge/experience is traditional banking. But, the focus of the current bill is likely disregarding some key risk areas.

The GENIUS bill is a good start. We need strong partnership between the regulatory agencies, their staff, the private sector, and the open source/research communities these technologies are born out of, so that we can quickly iterate the rules/laws that govern stablecoin activity in the U.S.