In a significant turn for the cryptocurrency landscape, the U.S. Congress has passed its first major standalone crypto legislation, known as the GENIUS Bill. The House of Representatives approved the bill with a bipartisan vote of 308-122, garnering substantial support from the Democratic side. This new law specifically addresses regulations surrounding stablecoins, a type of cryptocurrency that proponents argue could revolutionize commerce.
This legislative win represents a major victory for the crypto industry, as well as an important achievement for President Donald Trump, who has expressed his ambition for the U.S. to become ‘the crypto capital of the planet.’ His family also has financial interests in a crypto firm that has introduced its own stablecoin, positioning them to benefit from the new regulations.
The passage of the GENIUS Bill, which stands for ‘Guiding and Establishing National Innovation for U.S. Stablecoin,’ comes after a vigorous process that involved interventions from President Trump. Despite the initial support for the bill during the designated ‘Crypto Week,’ procedural hurdles lingered due to objections from some Republican lawmakers relating to the manner of passing two additional crypto bills. Ultimately, President Trump’s persuasion played a crucial role in securing the necessary votes, allowing the House to move forward with the long-voted bill.
Following its approval by the House, the GENIUS Bill is set to be sent to President Trump for his signature, as the Senate had already approved it in the previous month. Securities and Exchange Commission Chairman Paul Atkins praised this milestone, stating that it marks a historic moment for crypto entrepreneurs, financial market participants, and everyday Americans.
With the enactment of this legislation, the U.S. is transitioning toward a formal set of regulations for cryptocurrencies, a notable shift from the more stringent approach advocated by the Biden administration. Critics have pointed out that these new rules may be too lenient, but they represent a definitive move toward greater clarity in the regulatory landscape.
The GENIUS Act is expected to pave the way for additional crypto legislation, including a forthcoming proposal aimed at clarifying which regulatory bodies will oversee different aspects of the cryptocurrency realm. Another proposal under consideration is one that seeks to prevent the U.S. from adopting a digital version of the dollar. However, these potential new laws must still navigate the Senate before they can be enacted.
At the core of the GENIUS Bill is a focus on stabilizing the crypto landscape through regulations surrounding stablecoins, which are often considered safer than other types of cryptocurrencies. The underlying principle of stablecoins is that for every stablecoin issued, the corresponding dollar amount must be held in reserve by the issuer.
Thus, if an individual buys $1 worth of stablecoin, the issuer is required to maintain $1 in reserve, ensuring prompt reimbursement when the individual wishes to cash in their stablecoin. Industry advocates argue that stablecoins will facilitate instant, cost-effective global transfers of money, potentially transforming the current systems of credit cards and wire transfers.
The interest in stablecoins is growing among major financial institutions and retailers, with firms like JPMorganChase and industry giants like Amazon and Walmart reportedly considering their own stablecoin offerings. For these retailers, the ability to circumvent traditional credit card fees could represent substantial savings.
However, the passage of the GENIUS Act is not without controversy. Critics have raised concerns about President Trump’s potential financial benefits, asserting that he has a vested interest in World Liberty Financial, a company known for issuing a stablecoin referred to as USD1, despite its minimal market share.
The GENIUS Bill’s emergence follows a substantial investment in lobbying efforts by the crypto sector, which reportedly allocated over $100 million in congressional races last year. This lobbying effort is expected to expand further as the midterm elections approach, prompting warnings from critics regarding the implications of such financial influence in shaping legislation.
Corey Frayer, director of consumer protection for the Consumer Federation of America, expressed concern that this financial motivation could silence potential dissenters among lawmakers. He noted that the crypto sector’s significant funding could deter some legislators from opposing the industry out of fear of financial repercussions in subsequent election cycles.
The GENIUS Bill mandates that stablecoin issuers maintain appropriate reserves and share information regarding their holdings to ensure transparency. It also introduces anti-money laundering provisions to combat concerns that stablecoins might facilitate illicit activities, such as ransomware attacks or drug trafficking.
Despite these measures, critics argue that the regulations provided by the bill are insufficient and would enable non-financial entities to issue their own stablecoins without adhering to the comprehensive rules established for traditional financial institutions. Frayer added that while the stablecoin industry claims to offer a superior payment system, the intent of the bill may merely be to provide an appearance of regulation.
As the landscape of cryptocurrencies evolves with the approval of the GENIUS Bill, both proponents and critics will be watching closely to see how these new regulations are enacted and their impact on the broader financial system.
image source from：npr
