U.S. House Passes GENIUS Act Boosting Crypto Momentum

The U.S. House of Representatives has passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS Act), marking a significant milestone for the cryptocurrency industry. Analyst George Kailas described this event as "a landmark moment for crypto" and stablecoins in particular. Kailas, CEO of Prospero.ai, highlighted that this vote signifies a shift in U.S. policymakers' stance towards embracing structured innovation in digital assets rather than suppressing it. This development is expected to create significant momentum in the crypto markets, driven by both institutional and retail interest.

Kailas noted that even before the final passage of the GENIUS Act, major institutions such as America’s largest banks, Amazon, and Walmart had started referencing stablecoins on earnings calls. This indicates a major shift in corporate perception and planning. Looking ahead, Kailas believes that the lack of regulatory clarity, which has been a psychological hurdle for many retail investors, is now being addressed. This could lead to an increase in retail inflows, followed by institutions anticipating and buying ahead of those flows, creating a feedback loop similar to that seen in high-momentum stocks.

Tim Enneking, managing partner of Psalion, also emphasized the significance of this legislative milestone. He stated that this is a watershed moment in the history of digital assets, given the U.S.'s status as the largest economy and source of risk capital in the world. Enneking believes that the legitimization granted by the U.S. government to the digital asset space far outweighs the specifics of the GENIUS Act. He described the digital currency space as entering a new era, with hope now becoming a fact and the digital asset world facing a new dawn.

Tom Bruni, editor-in-chief & VP of community at Stocktwits, spoke to how the passage of the GENIUS Act will enable the continued evolution of the crypto space. He noted that there is a clear understanding that a regulated stablecoin market is needed to facilitate the next phase of the crypto industry’s growth. This will support the overall ecosystem by enabling transactions, cross-border payments, and decentralized finance (DeFi) applications such as lending and borrowing. Bruni acknowledged that there is still significant work to be done on the regulatory side, but the recent actions have helped keep things moving in the right direction.

Greg Magadini, director of derivatives for digital asset data provider Amberdata, discussed the impact that the passage of the GENIUS Act could have on U.S. Treasuries. He emphasized that one of the main elements of the GENIUS Act is the requirement for stablecoins to be backed 1-to-1 by highly liquid reserves, such as U.S. Treasury bills. This creates an implicit partnership with the U.S. government, as the current administration seeks to finance the government through short-term T-bills to refinance at lower rates. Magadini noted that the adoption of stablecoins will not only create new buyers of U.S. short-term debt but also help cement the U.S. dollar as the blockchain reserve currency. The current use cases for stablecoins involve DeFi Dex trading, smart-contract dApps, and simple payments. The U.S. government is now incentivized to support the next waves of blockchain innovation, such as real-world assets (RWAs) and tokenized stocks.