House Passes GENIUS Act 308-122 to Regulate Stablecoins

The U.S. House of Representatives has passed the GENIUS Act, a significant piece of legislation aimed at establishing a regulatory framework for stablecoins. The bill, which received 308 votes in favor and 122 against, is seen as a pivotal step in positioning the United States as a global leader in the cryptocurrency sector. The GENIUS Act, short for Guiding and Establishing National Innovation for U.S. Stablecoins, introduces stringent requirements for stablecoin issuers, including full reserve backing by liquid U.S. dollar assets, mandatory monthly disclosures of reserve composition, and licensing and supervision under a federal regulatory framework. These measures are designed to reduce systemic risk, enhance consumer protection, and boost investor confidence in stablecoins, which have become essential tools for crypto payments.

The passage of the GENIUS Act comes at a time when the market capitalization of stablecoins has surpassed $262 billion worldwide, and the volume of on-chain transactions in stablecoins has grown to more than 70%. Policymakers believe that the U.S. can no longer afford to remain reactive to the rapid growth of stablecoins. Senator Bill Hagerty, the bill’s sponsor, emphasized the importance of this legislation in modernizing the U.S. payment system and ensuring the global dominance of the U.S. dollar in digital finance. The GENIUS Act addresses the risks associated with stablecoins by mandating transparency and solvency, key gaps that previous crypto projects have exploited. This move is seen as a strategic alignment of the U.S. with crypto dollarization, positioning dollar-backed stablecoins as the default digital currency for global trade, remittances, and digital commerce.

The GENIUS Act now awaits presidential approval. President Trump has expressed his support for turning the U.S. into the “crypto capital of the world,” and the signing of the GENIUS Act would be his first major legislative action in this regard. The bill’s passage marks a significant shift from the previous administration’s cautious stance toward the crypto industry. The crypto industry has responded positively to the bill, with major players like Circle, Tether, and PayPal issuing statements of support. The market capitalization of USDC and USDT in circulation and issuance rose by $1.2 billion in a 48-hour period, while trading volumes on top U.S. exchanges surged by nearly 15%. Advocates for crypto also praised the bill for subjecting bank-issued and non-bank-issued stablecoins to the same regulatory requirements, which could encourage greater competition and innovation in the space.

The timing of the GENIUS Act’s passage is politically significant, as the 2024 election cycle heats up. Crypto regulation has become a key issue in U.S. economic policy, with the crypto industry spending significant amounts to support candidates with positive positions on cryptocurrency. The GOP’s majority in the House and Trump’s return to mainstream politics have created an opportune environment for pro-crypto legislation to gain traction. The GENIUS Act’s passage is seen as a major step in establishing the U.S. as a leader in the global crypto landscape, with the potential to reshape the digital dollar landscape and supercharge the U.S. crypto industry.