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The week dedicated to cryptocurrency in the US Congress concluded with the House of Representatives approving groundbreaking federal legislation aimed at overseeing stablecoins. Having already secured approval from the Senate, the new law awaits only the president’s signature to be enacted.
Furthermore, two additional pieces of crypto-related legislation successfully passed through the House and are now headed to the Senate for consideration.
This marks a significant achievement for the cryptocurrency sector, which invested heavily in the previous election cycle, providing support to candidates, including Donald Trump, who has become a prominent supporter of cryptocurrency investments.
During “Crypto Week”, the House aimed to pass three bills concerning cryptocurrency. However, disagreements among Republican representatives regarding the consolidation of the legislation led to delays exceeding one day.
Eventually, Republican leadership opted to hold separate votes on each of the three bills. A bill designed to regulate stablecoins, a specific type of cryptocurrency, had already garnered broad bipartisan support in the Senate and will now proceed for presidential approval.
The remaining two bills – a broader initiative to establish a new regulatory framework for the cryptocurrency market and a bill intended to prevent the Federal Reserve from introducing a digital currency – will be debated in the Senate at a later date.
US Stablecoin Regulation: An Overview
The stablecoin bill, officially termed the “Genius Act,” establishes initial safeguards and consumer protections for this form of cryptocurrency, encompassing reserve mandates, auditing procedures, and regulatory compliance.
Stablecoins are digital tokens whose value is linked to a stable asset, most commonly the US dollar, to mitigate price fluctuations.
During Thursday morning’s legislative discussions, House Financial Services Chair French Hill of Arkansas commented, “Payment systems are transforming globally”. He added that this bill will “ensure American competitiveness and implement robust safeguards for consumers.”
Lawmakers and industry insiders view the stablecoin measure as an important step towards enhancing the legitimacy and public confidence of this rapidly expanding sector. Scott Bessent, US Treasury Secretary, stated in June that this legislation could potentially allow the currency to “expand into a $3.7 trillion (€3.2tr) market by the end of the decade.”
The bill outlines requirements for stablecoin issuers, including adherence to US anti-money laundering regulations and sanctions laws. It also mandates that issuers maintain adequate reserves to back their cryptocurrency.
Without such a framework, the Senate Banking Committee’s Republican members cautioned in a statement, “consumers are exposed to risks like unstable reserves or unclear practices from stablecoin issuers.”
Following the votes, House Republicans strongly urged the Senate to prioritize the second bill, which aims to create a new market structure specifically for cryptocurrency.
That legislation intends to clarify the regulatory status of digital assets by defining which cryptocurrencies should be categorized as commodities, subject to the Commodity Futures Trading Commission, and which are securities, overseen by the Securities and Exchange Commission. In general, tokens associated with well-established blockchains, such as Bitcoin, will be classified as commodities.
The third bill, which passed in the House by a smaller margin of 219-210, prohibits the US from introducing a “central bank digital currency,” a digital form of cash issued by the government.
The Imperative for US Cryptocurrency Regulation
The cryptocurrency industry has long argued that regulatory ambiguities hinder its operations within the US and that the current administration is attempting to regulate through enforcement actions rather than transparent, predictable rulemaking.
The passage of this bill has been a top priority for the industry, which has rapidly evolved into a major force in Washington, fuelled by substantial campaign contributions and extensive lobbying activities.
Patrick McHenry, former chair of the House Financial Services Committee and current vice chair of the crypto firm Ondo Finance, asserted that the legislation will have a “massive generational impact,” similar to the securities laws enacted by Congress in the 1930s that were instrumental in establishing Wall Street as the global financial hub.
“These bills will position the United States as the global centre for digital assets,” he stated.
While the bill enjoys considerable bipartisan support, it has also drawn criticism from Democrats who contend that the legislation should account for Trump’s personal financial interests within the cryptocurrency sector.
A provision included in the stablecoin bill prohibits members of Congress and their immediate family from profiting from stablecoins. However, this prohibition does not extend to the president and his family.
According to Forbes, the president’s cryptocurrency holdings are more valuable than any single real estate asset in his portfolio, estimated at $1 billion (€860 million).
The Republican president’s family maintains a significant ownership stake in World Liberty Financial, a crypto venture that launched its own stablecoin, USD1.
According to a publicly released financial disclosure from June 2024, Trump reported earning $57.35 million (€49.2 million) from token sales at World Liberty Financial.
Some Democrats have also expressed concerns that the bill establishes what they consider a lenient regulatory framework with potential long-term financial consequences. They have also raised concerns about the possibility that the legislation could enable major corporations to issue their own private cryptocurrencies.
“If this bill is enacted, it will allow Elon Musk and Mark Zuckerberg to issue their own currency. The bill still allows Big Tech companies and other conglomerates to issue their own private currencies,” stated Massachusetts Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee.