House Passes Genius Act Regulating Stablecoins 99% Bipartisan Support

On Thursday, the House of Representatives passed the Genius Act, a bill that establishes rules for stablecoins, a type of cryptocurrency pegged to the U.S. dollar. President Donald Trump is expected to sign the legislation into law at a ceremony on Friday afternoon. This marks a significant victory for the crypto industry, which has long been viewed as an outlaw sector since its inception in the wake of the 2008 financial crisis. The approval from Congress and the broad embrace by the Trump administration lend new legitimacy to blockchain technology, attracting once-skeptical institutions like Big Tech companies and banks.

However, as Congress prepares to debate a second bill focused on regulating cryptocurrencies and exchanges, critics have raised concerns about potential conflicts of interest. The passage of the stablecoin legislation has highlighted the increasing ties between Trump’s business empire and blockchain interests. Todd Phillips, a banking and administrative law professor at Georgia State University, warned, “That is a huge conflict of interest that society is just really not prepared for.”

Congress has been focusing on stablecoins for some time, with bipartisan efforts led by ranking member Patrick McHenry and Chair Maxine Waters in 2022. The progress was delayed by the collapse of Sam Bankman-Fried’s crypto exchange, but as crypto prices recovered and top firms began investing in political donations, the House of Representatives resumed efforts on stablecoin legislation. This week, the new legislation garnered broad bipartisan support, although it faced vocal criticism. One contentious issue was the lack of safeguards around Trump’s growing crypto business, including his blockchain company World Liberty Financial launching its own stablecoin, USD1. Efforts to add provisions establishing rules around how Trump and other politicians could profit from cryptocurrencies were unsuccessful.

Phillips pointed out that the new bill empowers the Office of the Comptroller of the Currency to supervise nationwide stablecoin issuers. However, he expressed concern that the Trump administration has moved to diminish the independence of regulatory bodies, including by firing agency heads. “It’s a really big problem that the president has an indirect financial relationship with a stablecoin issuer,” Phillips said. “That stable coin issuer may go to the OCC asking for a license, and if the OCC doesn’t give it to them, the president can fire the comptroller.”

Phillips also raised concerns about the dual licensing structure for some stablecoin issuers, which allows them to seek either federal or state supervision. He warned that this could create a “race to the bottom” for different jurisdictions seeking to attract crypto companies. A senior Treasury official, however, argued that without the legislation, the country would face a patchwork of state regulatory frameworks. “Now we have a strong federal baseline that can serve as that sort of federal standard,” the official said.

President Trump is set to sign a landmark piece of legislation aimed at regulating the cryptocurrency industry, with a particular focus on stablecoins. The bill, approved by Congress, grants the Office of the Comptroller of the Currency the authority to oversee nationwide stablecoin activities. This move is part of a broader effort to ensure American competitiveness in the global cryptocurrency market while providing strong consumer protections.

The legislation mandates that stablecoin issuers comply with anti-money laundering laws and sanctions regulations. It also requires issuers to hold sufficient reserves to back the value of the stablecoins they issue, ensuring stability and trust in the market. This regulatory framework is designed to address concerns about the potential risks associated with stablecoins, including their use in illicit activities and their impact on financial stability.

Critics have expressed significant concerns about potential conflicts of interest, particularly regarding the Trump family's involvement in various crypto ventures. These concerns have led to calls for greater transparency and accountability in the implementation of the new regulations. The bill also includes provisions that ban members of Congress from issuing their own cryptocurrencies, aiming to prevent conflicts of interest and ensure the integrity of the legislative process.

The Senate is expected to approve the legislation, marking a historic step in the regulation of the cryptocurrency industry. The bill is the first of what is expected to be a series of regulatory measures aimed at legitimizing and stabilizing the cryptocurrency market. The legislation builds on previous frameworks and is designed to provide a comprehensive regulatory structure for stablecoins, ensuring that they operate within the bounds of existing financial laws and regulations.

The passage of this bill represents a significant milestone in the evolution of the cryptocurrency industry. It demonstrates the government's commitment to fostering innovation while protecting consumers and maintaining financial stability. As the cryptocurrency market continues to grow and evolve, this regulatory framework will play a crucial role in shaping its future development.