Congress Passes GENIUS Act in Major Win for US Crypto Industry

The US House of Representatives on Thursday voted overwhelming to pass the country’s first significant cryptocurrency regulation, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. It will now go to President Donald Trump for final approval.

If enacted, the bill will establish rules for issuers of stablecoins, a type of coin pegged to a $1 valuation, which proponents have pitched as a faster and cheaper way to make payments. The bill requires issuers to collateralize stablecoins with low-risk assets on a one-to-one basis, provide accounts to a state or federal regulator, and maintain anti-money-laundering controls.

In June, US Treasury secretary Scott Bessent said he believes that the stablecoin economy could reasonably exceed $2 trillion—up from $195 billion today—off the back of the GENIUS Act.

On the campaign trail last year, Trump pledged to turn the US into the “crypto capital of the planet.” After the GENIUS Act cleared the Senate in June, the president called for the House to deliver the bill to his desk “ASAP,” with no further modifications or additions. He has now gotten his wish.

David Sacks, a venture capitalist serving as the so-called White House AI and Crypto Czar, celebrated the bill’s passage in a social media post. “Massive wins for crypto in the House,” Sacks wrote.

The crypto industry has widely heralded the bill as a historic step that will better protect stablecoin holders from fraud and reckless mismanagement and help to prevent them from being abused by criminal actors. “Gone are the days where you could be a stable-in-name-only coin and freely enter the US market,” says Dante Disparte, chief strategy officer at Circle Internet Group, issuer of the USDC stablecoin.

But critics see the GENIUS Act as a light-touch concession to an industry that spent hundreds of millions of dollars influencing the outcome of congressional races in 2024. “New laws are needed to establish crypto guardrails and safeguards, but this one is ineffectual or worse,” said Democratic senator Richard Blumenthal after the bill passed in the Senate.

Opponents claim the bill does not go far enough in eliminating loopholes, guarding against fraud by stablecoin issuers, or addressing potential conflicts of interest arising from the Trump family’s crypto endeavors.

The stablecoin business model is relatively simple: Customers exchange US dollars for coins that can be used for payments or to trade freely for other cryptocurrencies. The stablecoin issuers keep some of those dollars in cash and cash equivalents and invest the rest into yield-bearing assets like government bonds—and pocket the interest.

A stablecoin holds a steady valuation by way of the understanding that, if ever somebody wants to redeem a coin for the dollar it represents, the issuer can dip into its reserve and pay them.

In the past couple of years, a handful of other companies, including PayPal, Ripple, and World Liberty Financial (which is affiliated with the Trump family) have joined industry stalwarts Tether and Circle in issuing stablecoins. But experts predict the passage of the GENIUS Act will lead to an explosion in the number of dollar-denominated stablecoins.

“Competition will be fierce,” says Christian Catalini, founder at MIT Cryptoeconomics Lab and cocreator of Diem, the now-defunct stablecoin project funded by Meta. “You will see many more issuers enter the market and compete. Many of those issuers will be more traditional banks and fintechs.”

Crypto advocates argue that stablecoins will strengthen the US Dollar as the global reserve currency by increasing demand in developing countries with unstable economies, and allow the US to borrow more cheaply by juicing demand for government bonds. “You couldn’t come up with a better innovation for the greenback on a whiteboard,” says Christopher Perkins, president at crypto VC firm CoinFund.

However, a stablecoin proliferation could destabilize the financial system if regulators fail to maintain proper oversight, critics have warned. If, for example, a major issuer were to fatally mismanage a stablecoin reserve, leading to a collapse in the coin’s value and a potential run on other stablecoins, the value of US government bonds could tumble as issuers are forced to liquidate their reserve assets to cover redemptions, leaving taxpayers potentially on the hook to pay for bailouts.

“I am very wary of steps to basically integrate privately issued currency further into the financial system. At bottom, that’s what this represents,” says Jacob Silverman, coauthor of the book Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud.

Another common objection to the GENIUS Act relates to the absence of any provisions that would prevent Trump and his family from profiting from their own stablecoins.

In May, World Liberty Financial announced that its USD1 stablecoin would be used by investment firm MGX, which is funded by the United Arab Emirates, to make a $2 billion investment in Binance, the world’s largest crypto exchange. The Trump-affiliated firm could earn tens of millions of dollars from the deal, which sparked complaints among critics who claimed the transaction amounted to “foreign policy for sale.”

“By passing the GENIUS Act, politicians are blessing the corruption of President Trump,” claims Silverman. “We want to protect consumers, but I don’t think [crypto] should be further legitimized in the US until the situation with Trump’s crypto corruption and the Republican Party is resolved.”

The White House did not respond to a request for comment.

Yet, when the House came to vote on Thursday, even lawmakers who had previously objected to Trump’s crypto entanglements—among them congressman Sam Liccardo, a Democrat who in February introduced legislation meant to prevent elected officials from profiting by their own crypto coins and certain other assets—lined up behind the GENIUS Act.

“Whether there is a congressional seal of approval or not, it is obvious that the Trump memecoin scheme and now stablecoin scheme appear to be uninhibited by any concerns that people might have,” says Liccardo. “Even if we got exactly the language that I wanted into this bill to prohibit Trump, we don’t have a Department of Justice that is ever going to prosecute this president or anyone around him for violating that law,” he adds.

The DOJ did not respond to a request for comment either.

Though the GENIUS Act might be imperfect, the urgent need to rein in the “Wild West” stablecoin market demanded a calculated compromise, Liccardo says. “If we pass nothing, we continue to have great uncertainty about who can regulate and how,” he explains. “I see this as not wanting to make the perfect the enemy of good.”