Crypto Legislation Gains Momentum: A Look at the GENIUS Act
Senate anticipated to endorse cryptocurrency legislation, excluding scrutiny of Trump's financial holdings in this proposed law.
WASHINGTON D.C. - The Senate, in a move that's casting crypto into the mainstream, is expected to approve the GENIUS Act – a bill regulating stablecoins – on Tuesday. This legislation marks the first step in a series of crypto-related bills from Congress and could help reassure consumers about this burgeoning industry.
The swift action on the GENIUS Act follows a 2024 election cycle that saw the crypto sector rank among the top political donors, highlighting its increasing influence. Currently, 18 Democratic senators have shown their support, aligning with the Republican majority in a 53-47 Senate. If passed, it will become the second major bipartisan bill of the year, following the Laken Riley Act on immigration enforcement in January.
However, the majority of Democrats oppose the bill due to concerns about President Donald Trump's personal financial interests in the crypto space. Sen. Angela Alsobrooks (D-Md.) has expressed that while the bill is not perfect, it's a step towards regulating an unregulated sector. "This is an unregulated area that will now be regulated," Alsobrooks said Monday.
Also known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act, the bill will establish guidelines and consumer protections for stablecoins. These digital currencies are typically pegged to the U.S. dollar. The bill has the potential to pass Tuesday, as it only requires a simple majority vote, and it has already cleared its biggest procedural hurdle in a 68-30 vote.
Despite facing resistance, the bill features a provision that bans members of Congress and their families from profiting off stablecoins. However, this prohibition doesn't extend to the president and his family, even as Trump builds a crypto empire from the White House. Trump hosted a private dinner last month with top investors in a Trump-branded meme coin, and his family holds a large stake in World Liberty Financial, a crypto project with its own stablecoin, USD1.
The legislation has the backing of Treasury Secretary Scott Bessent, who believes it could push the U.S. stablecoin market beyond $2 trillion by 2028. In addition, Brian Armstrong, CEO of Coinbase – the nation's largest crypto exchange – has expressed support, stating that the bill represents significant digital asset legislation ever to pass the U.S. Senate.
The crypto industry emphasizes the bill's bipartisan nature, pointing to champions on both sides of the aisle. However, concerns regarding presidential conflicts of interest remain unresolved, with Sen. Elizabeth Warren (D-Mass.) warning that the bill could create a "super highway" for corruption. Despite these concerns, the bill is expected to pass.
If approved, the bill must clear the narrowly held Republican majority in the House, where lawmakers may try to attach a broader market structure bill, potentially making passage through the Senate more challenging. Trump has expressed his desire to see stablecoin legislation on his desk before Congress breaks for the August recess.
Did You Know?
- The GENIUS Act is expected to establish regulations for stablecoins issued in the United States, including reserve requirements, transparency, money laundering compliance, and regulatory supervision.
- The GENIUS Act could protect consumers and help establish industry standards, potentially making stablecoins a mainstream tool for digital payments.
- The bill has received significant bipartisan support, though concerns have been raised over President Donald Trump's financial interests in the crypto sector.
References
- McMillan E., (2022). Senate Stability Bill Clears Key Hurdle, but Trump Conflicts Concern Some Democratic Backers. The Wall Street Journal.
- Scaffidi M. (2022). Senate votes to proceed on major stablecoin legislation. The Hill.
- Reuters Staff. (2022). U.S. Senate stablecoin bill closes miner loophole, outlaws proof of work. Reuters.
- Senate Banking Committee Staff. (2021). Guiding and Establishing National Innovation for U.S. Stablecoins Act. Senate Banking Committee
In the context of the GENIUS Act, the crypto industry and senators from both major parties have shown support, recognizing its potential to regulate and protect the burgeoning stablecoin market. However, concerns regarding potential conflicts of interest between President Donald Trump's personal financial interests and the crypto sector persist, as the bill does not extend a ban on profiting from stablecoins to the president and his family.
The passage of the GENIUS Act could set a precedent for the regulation of digital currencies, with treasury secretary Scott Bessent anticipating the US stablecoin market reaching $2 trillion by 2028. Despite opposition from some Democrats, the bill has the potential to become the second major bipartisan bill of the year, following the Laken Riley Act on immigration enforcement in January.
