On Tuesday, the Senate approved new legislation aimed at regulating stablecoins, a type of cryptocurrency typically tied to the U.S. dollar, marking a significant step in enhancing the legitimacy of the crypto industry. The bill, known as the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins), was passed with a 68-30 vote and will now proceed to the House, where amendments may be proposed.
This legislation reflects the growing influence of the crypto sector, particularly as it becomes a notable political spender ahead of the 2024 campaign. It aims to establish essential safety measures and consumer protections for stablecoins, which are increasingly prevalent in financial markets. However, it has also sparked concerns among some lawmakers regarding possible conflicts of interest, particularly relating to former President Trump’s financial ties to the cryptocurrency industry.
Eighteen Democratic senators joined Republicans to support the bill, while Republican senators Josh Hawley and Rand Paul opposed it. The passage is indicative of a rare bipartisan effort in a highly polarized Congress, though it still met with significant opposition, especially from Democrats who argue that it does not adequately address Trump’s personal financial interests related to cryptocurrency.
Angela Alsobrooks, a co-sponsor of the bill, acknowledged its imperfections but emphasised the necessity of regulation in this previously unregulated space. However, critics, including Democratic Senator Jeff Merkley, voiced concerns that the bill could inadvertently endorse the potential corruption linked to the former president’s business dealings.
The legislation introduces a provision barring members of Congress and their families from profiting off stablecoin ventures, yet this exemption does not include Trump or his family, despite his prominent role in the crypto market. Senator Elizabeth Warren has been a vocal critic, asserting that the bill could facilitate regulatory loopholes allowing large tech firms to enter the stablecoin market.
Despite these challenges, supporters, including Bill Hagerty, the bill’s sponsor, maintain that this legislation brings the U.S. closer to leading in the global crypto arena. Moreover, the Biden administration generally backs the growth of the cryptocurrency market, with Treasury Secretary Scott Bessent noting its potential to expand significantly in the coming years.
As the bill heads to the House for further examination, it will confront additional challenges, including the possibility of further amendments and the need for a majority approval in a Republican-led chamber. Since Trump desires stablecoin legislation to be enacted before Congress recesses in August, time is of the essence for lawmakers to navigate these complexities.