On Tuesday, a pivotal moment unfolded in the world of cryptocurrency as the Senate passed the landmark GENIUS Act, which establishes the inaugural federal guidelines for stablecoins. 

This legislation, which was approved with a 68-30 vote, introduces a regulated framework that enables private entities to create digital currencies under the supervision of the federal government.

Revolutionizing Stablecoin Oversight in the USA

The GENIUS Act represents the first substantial legislative advancement for the cryptocurrency industry, which contributed around $250 million during the 2024 election cycle to bolster what has become the most favorable Congress toward digital assets in U.S. history.

Despite passing in the Senate, the bill must navigate the complexities of the Republican-controlled House, where a competing proposal known as STABLE is currently under review. 

This legislative breakthrough hints at a transformative shift not only for the cryptocurrency technology but also for the bureaucratic landscape surrounding it.

The GENIUS Act, officially known as the Guiding and Establishing National Innovation for US Stablecoins Act, lays down critical protections for the stablecoin sector. Key stipulations include full reserve backing, required audits on a monthly basis, and adherence to anti-money laundering laws. 

Furthermore, the act opens avenues for a diverse range of issuers—banks, fintech firms, and significant retail companies—to issue their own stablecoins or incorporate them into existing payment structures.

The Importance of Bipartisan Consensus

Treasury Secretary Scott Bessent, who will wield substantial regulatory power under the new legislation, noted during a recent Senate hearing that the U.S. stablecoin market might expand nearly eightfold, potentially exceeding $2 trillion in the forthcoming years. 

Initially, the GENIUS Act was perceived as one of the less contentious crypto-related bills, yet it has encountered numerous setbacks and delays, including a prior inability to reach the Senate floor. 

Senator Cynthia Lummis from Wyoming expressed her astonishment at the hurdles faced, stating, “I had no idea how hard this was going to be.” 

Likewise, Senator Bill Hagerty from Tennessee emphasized the challenges of building bipartisan backing, especially highlighting the support from 18 Senate Democrats who ultimately endorsed the legislation.

Image sourced from DALL-E, chart provided by TradingView.com