Senate Passes GENIUS Act, Paving Way for Stablecoin Boom

The Senate has passed the GENIUS Act, marking a significant milestone as the first major piece of crypto legislation in the United States. This landmark bill establishes a comprehensive framework for the issuance and trading of stablecoins, which are cryptocurrencies typically pegged to the U.S. dollar. Stablecoins serve as a crucial bridge between the crypto ecosystem and traditional financial markets, allowing users to enter and exit crypto positions without directly accessing dollars.

In recent months, major players in the financial sector, including top banks, key Wall Street entities, retail giants like Walmart, and tech titans like Amazon, have expressed interest in developing their own stablecoins. The incentives for these entities range from collecting yield on customer deposits to avoiding costly traditional payment processing fees. Industry experts anticipate that once the stablecoin legislation is signed into law, there will be a significant influx of capital from Wall Street and the American banking sector into the crypto market, potentially amounting to trillions of dollars.

U.S. Treasury Secretary Scott Bessent highlighted the potential benefits of a thriving stablecoin ecosystem, stating that it could drive demand for U.S. Treasuries, which back stablecoins. This increased demand could lower government borrowing costs and help manage the national debt. Additionally, it could onboard millions of new users globally into the dollar-based digital asset economy.

Crypto industry leaders have hailed the Senate's vote as a landmark victory for the sector. Liat Shetret, vice president of Global Policy and Regulation at Elliptic, a blockchain intelligence firm, described the legislation as a pivotal step in shaping the country’s digital asset future and addressing the oversight of the rapidly growing digital asset ecosystem. Amanda Tuminelli, executive director of the DeFi Education Fund, an industry lobbying group, called it a win for the U.S., innovation, and appropriate regulation for digital assets.

The GENIUS Act now needs to pass a vote in the House before it can be sent to the President's desk for signature. However, the timing of this vote is uncertain. Senate Republicans have urged for swift passage, ideally by July 4, but House Republicans have their own stablecoin bill and may want to combine it with a broader crypto market structure bill to increase its chances of passage through both chambers. This could lead to a standoff between Senate and House Republicans, who have differing priorities regarding which crypto bills to pass and when.

The White House has not yet indicated whether the President will sign the GENIUS Act as a standalone bill or wait until both stablecoin and crypto market structure legislation are passed. Bo Hines, executive director of the President's Council of Advisors on Digital Assets, championed the GENIUS Act, highlighting its potential to upgrade payment rails for the digital age, establish U.S. dominance in digital asset innovation, and protect the U.S. dollar’s role as the world’s reserve currency.

Senator Cynthia Lummis (R-WY) emphasized that the passage of the GENIUS Act is just the first step and that Congress must pass comprehensive market structure legislation in the coming months. She hopes to pass such legislation in the Senate by the end of 2025. The journey to passing the GENIUS Act in the Senate was not smooth; just last month, the bill failed a key procedural vote after pro-crypto Democrats withdrew their support due to perceived conflicts of interest in the White House. The bill was subsequently updated to include additional language on conflicts of interest, which helped regain the support of many Democrats. However, the bill still allows the President, the Vice President, and their families to engage in stablecoin-related ventures while in office.