President Trump finalizes legislation governing stablecoins, marking a significant achievement for the cryptocurrency sector.
In a significant move for the cryptocurrency industry, President Donald Trump has signed the "Giving Every User Protection and Regulatory Benefits (GENIUS) Act" into law. The bill, which passed both the House and Senate with wide bipartisan margins, aims to provide initial guardrails and consumer protections for stablecoins.
The crypto industry has become a major power player in Washington, with massive campaign donations and spending on lobbying. The passage of the GENIUS Act comes as Trump had repeatedly pledged to make the U.S. the "crypto capital of the world."
The Act establishes a comprehensive regulatory framework for "payment stablecoins," digital assets designed for payments and settlements, maintaining a stable value against a fiat currency like the U.S. dollar. Only entities approved by federal or state regulators, known as "permitted payment stablecoin issuers," are allowed to issue stablecoins in the U.S. This dual federal-state framework aims to promote flexibility while maintaining uniform standards.
Issuers must maintain reserves on a 1:1 basis with outstanding stablecoins, ensuring stability and reducing risk. These reserves must be held in highly liquid assets such as U.S. currency or Treasury bills. Regular audits and transparency requirements are mandated to ensure issuer compliance and consumer trust. Algorithmic stablecoins are excluded from being classified as "payment stablecoins," reflecting concerns about their stability and potential risks.
The Act provides long-awaited regulatory clarity, which could encourage innovation and investment in the stablecoin sector while safeguarding consumers. It includes a phased implementation timeline, allowing existing stablecoin issuers time to adapt to the new regulatory requirements.
The GENIUS Act is intended to bolster consumer confidence in the crypto industry. It does not regulate direct peer-to-peer transfers or self-custody of payment stablecoins, maintaining consumer flexibility in how they use these assets. The Act also does not extend the ban on profiting from stablecoins to the president and his family, despite Trump's family holding a significant stake in World Liberty Financial, a crypto project that launched its own stablecoin.
The Securities and Exchange Commission dropped several enforcement actions against large crypto companies during Trump's administration. Trump, who previously expressed skepticism towards cryptocurrency, has since embraced it, praising crypto leaders for gaining respect in a short period of time. He told industry executives at a White House bill signing that the signing was a "massive validation" of their hard work and pioneering spirit.
The GENIUS Act is not the only legislation aimed at helping the crypto industry. The House has passed two additional bills, creating a new market structure for cryptocurrency and banning the Federal Reserve from issuing a new digital currency.
World Liberty Financial's stablecoin received an early boost from an investment fund in the United Arab Emirates. The success of the GENIUS Act and these other bills could further solidify the U.S.'s position as a leader in the crypto industry.
- Microsoft, a tech giant based in Seattle, has donated a substantial amount to political campaigns in support of positive business regulations for the crypto industry, following President Trump's signing of the GENIUS Act into law.
- The GENIUS Act, which aims to regulate and ensure consumer protections for stablecoins, could potentially pave the way for increased technological innovation in the cryptocurrency sector, possibly even attracting more companies like Microsoft to invest in this area.
- As the GENIUS Act and other favorable crypto legislations make their way through the political landscape, general news channels may likely cover the potential impacts of these regulations on Washington's tech-driven business scene, including the involvement of prominent tech companies like Microsoft.
