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In a landmark move, the United States Congress has officially endorsed its premier nationwide cryptocurrency law.
This action signifies a key development for the digital currency sector, which, after years of actively lobbying Congress for regulatory clarity and contributing significantly to the previous election cycle by supporting candidates like Donald Trump, is now seeing its efforts come to fruition.
The legislation establishes a framework for the regulation of stablecoins, a type of cryptocurrency designed to maintain a stable value by being pegged to reserve assets like the US dollar.
President Trump is anticipated to formally enact the measure into law this Friday, following its passage in the House of Representatives on Thursday. The Senate previously approved the bill last month.
Dubbed the “Genius Act,” this bill is part of a broader suite of cryptocurrency-related legislation progressing in Washington with the backing of President Trump.
While initially critical of cryptocurrency, dismissing it as a scam, Trump’s stance evolved as he garnered support from the crypto community and became involved in the industry through business ventures, including associations with entities such as World Liberty Financial.
Proponents of the legislation emphasize its aim to create a clear regulatory environment for the expanding cryptocurrency industry, positioning the US to remain at the forefront of payment system innovation. The cryptocurrency industry has actively advocated for such legislation, believing it will encourage wider adoption of digital currencies and integrate them further into mainstream financial systems.
Key provisions of the bill mandate that stablecoins, an alternative to cryptocurrencies like Bitcoin, maintain a one-to-one reserve of US dollars or other secure assets. Stablecoins are frequently utilized by traders to facilitate transactions between different crypto assets.
These digital coins, perceived as having lower volatility, have seen increased use recently.
However, critics contend that the bill could introduce new systemic risks by legitimizing stablecoins without adequate consumer safeguards.
Concerns include the potential for increased participation of tech companies in banking-like activities without comparable regulatory oversight and the lack of clear recourse for consumers in the event of a stablecoin firm’s bankruptcy.
Opponents also attempted to mobilize resistance to the bill by arguing that supporting it would effectively endorse President Trump’s business dealings, including the promotion of crypto coins by his family.
Despite these objections, the bill garnered substantial bipartisan support, with approximately half of Democrats and a majority of Republicans voting in favor.
“While some lawmakers may view the passage of this bill, even with its shortcomings, as preferable to the existing situation, we believe this represents a fundamental misunderstanding of the risks associated with these instruments,” stated a group of consumer and advocacy organizations in a letter to Congress earlier this year.
Their warning emphasized that the bill’s enactment could “enable the spread of assets that consumers might mistakenly believe are safe.”
Analysts had initially anticipated that all three crypto bills would pass through Congress earlier in the week; however, unexpected complications led to delays.
The two remaining bills, having been approved by the House, are now under consideration in the Senate, where Republicans maintain a slim majority. These bills propose to prevent the Federal Reserve from creating a digital currency and establish a regulatory system for other forms of cryptocurrency.
These advancements coincide with reports indicating that President Trump is developing an executive order that could potentially allow retirement accounts to invest in alternative assets, including cryptocurrencies, gold, and private equity.
Bitcoin’s valuation reached a new peak recently, surpassing $120,000 (£89,000).
Terry Haines, from Pangaea Policy, based in Washington, expressed skepticism that the other two, more comprehensive, bills would progress further.
“This marks the conclusion of crypto’s legislative victories for the foreseeable future – and the only one,” he noted. “When a straightforward issue like stablecoins takes roughly 4 to 5 years and barely weathers industry scandals, it’s not much to celebrate.”