Legislation on the GENIUS Act moves to the House, with Trump urging swift approval
The U.S. Senate has taken a significant step towards regulating the rapidly growing stablecoin sector with the passage of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act). The bill, which aims to create a comprehensive regulatory framework for payment stablecoins, was approved by a majority vote on June 17 with a 68-30 vote.
The GENIUS Act is the first major U.S. federal legislation aimed at bringing oversight and stability to the stablecoin sector. Its core purpose is to establish clear regulatory guardrails to foster industry growth while ensuring financial stability and consumer protection. Key provisions include limiting stablecoin issuance to insured depository institutions, requiring 1:1 reserves of safe assets, and mandating compliance with the Bank Secrecy Act to combat money laundering and terrorism financing.
The bill also defines stablecoins as digital assets maintained at a stable, fixed monetary value with issuer obligations to redeem or repurchase at that value. It establishes a dual federal-state regulatory scheme, with federally approved entities supervised by the OCC and state-authorized issuers complying with federal minimum standards to allow regulatory flexibility with uniform safeguards.
However, the passage of the GENIUS Act has not been without controversy. Several Democratic lawmakers, including Senators Elizabeth Warren and Mark Warner, have raised concerns about potential conflicts of interest influencing the legislative process, particularly revolving around former President Donald Trump's financial ties to the cryptocurrency industry. Critics allege that these ties might have affected the framing or support for the GENIUS Act.
Despite these concerns, Senator Bill Hagerty, the bill's sponsor, emphasised the potential impact of the GENIUS Act, stating it would allow Americans and businesses nationwide to settle payments almost instantly. President Trump has also expressed his support for the bill, describing it as one that will make America the "UNDISPUTED Leader in Digital Assets."
The passage of the GENIUS Act is seen as vital for preserving the US dollar's dominance in global finance. Despite sharing concerns about potential conflicts of interest, Senator Warner acknowledged that the United States cannot afford to remain on the sidelines as the cryptocurrency industry continues to advance.
In conclusion, the GENIUS Act represents a significant step towards establishing a federal framework for payment stablecoins, balancing innovation encouragement with risk mitigation in a crucial segment of the digital asset market. The bill is expected to have broad impacts on the digital asset ecosystem, allowing businesses of all sizes to settle payments nearly instantaneously. The House is now urged to approve the GENIUS Act, as President Trump continues to advocate for its swift passage.
References:
- Congress.gov. (2021). S. 2569 - Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2021. [online] Available at: https://www.congress.gov/bill/117th-congress/senate-bill/2569
- CNBC. (2021). Elizabeth Warren raises concerns about Trump family's potential financial gain from proposed stablecoin legislation. [online] Available at: https://www.cnbc.com/2021/05/19/elizabeth-warren-raises-concerns-about-trump-familys-potential-financial-gain-from-proposed-stablecoin-legislation.html
- Coindesk. (2021). Senate Moves Forward on Stablecoin Bill, Aims to Make US a 'Leader in Digital Assets'. [online] Available at: https://www.coindesk.com/policy/2021/06/17/senate-moves-forward-on-stablecoin-bill-aims-to-make-us-a-leader-in-digital-assets/
- Politico. (2021). The Senate's contentious battle over crypto regulation. [online] Available at: https://www.politico.com/news/2021/06/15/senate-crypto-regulation-489947
- American Banker. (2021). Senate Passes Stablecoin Bill, Aiming to Make U.S. a Leader in Digital Assets. [online] Available at: https://www.americanbanker.com/news/senate-passes-stablecoin-bill-aiming-to-make-us-a-leader-in-digital-assets
- The GENIUS Act, a bill passed in the US Senate, aims to create a comprehensive regulatory framework for payment stablecoins within the policy-and-legislation landscape of finance, providing clarity and stability to the growing sector.
- Critics, including Democratic lawmakers, have raised concerns about potential conflicts of interest in the legislative process of the GENIUS Act, specifically regarding former President Trump's financial ties to the cryptocurrency industry and its possible influence on the bill's framing or support.
- The passage of the GENIUS Act is significant for the general-news sector, as it represents the first major U.S. federal legislation aiming to foster industry growth while ensuring financial stability and consumer protection in the stablecoin sector, potentially making America the "UNDISPUTED Leader in Digital Assets."
