Federal Legislation, titled the GENIUS Act, Advances to Create National Structure for Stablecoins
The House of Representatives has passed the Groundbreaking and Essential Nurturing of Innovative Stablecoins (GENIUS) Act, sending it to President Trump for signing. The bill received strong bipartisan backing, with 206 Republicans and 102 Democrats supporting the measure, and is expected to be signed into law in the coming days.
The GENIUS Act establishes a federal regulatory framework for the stablecoin market, providing the compliance structure that major financial institutions have been seeking. This could potentially lead to a flood of institutional capital entering the stablecoin space, as well as accelerating the integration of digital assets into traditional finance.
Under the new framework, stablecoin issuers must maintain 100% reserves in high-quality liquid assets, undergo monthly audits, and register with federal or state regulators. They also have the option to choose between federal licensing through the Office of the Comptroller of the Currency or state-level oversight.
The bill prohibits algorithmic stablecoins following the collapse of TerraUSD in 2022, aiming to provide more stability and security for the market. However, some Democrats have expressed concerns about potential conflicts of interest and insufficient consumer protections in the GENIUS Act. Rep. Maxine Waters warned that the legislation is inadequate during floor debate.
The ban on central bank digital currencies is tied to the annual defense authorization bill, but the person who secured the standalone passage of the GENIUS Act is not explicitly named in the available sources. The bill's passage is expected to unlock significant institutional capital that has been waiting for regulatory clarity.
The crypto industry has celebrated the passing of the GENIUS Act as validation of their lobbying efforts. The bill's impact extends beyond stablecoins, potentially paving the way for a more integrated digital asset market in the United States.
Meanwhile, some Democrats also express concerns about the Trump family's crypto investments and potential conflicts of interest. The ban on central bank digital currencies remains a contentious issue, with holdouts meeting with President Trump at the White House to resolve the matter. The Senate previously approved the stablecoin legislation, and with President Trump's support, the GENIUS Act is set to become law.
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