Senate Passes Crypto-Friendly ‘GENIUS Act’
Key Takeaways
- The Senate passed the GENIUS Act Tuesday, giving a boost to stablecoin cryptocurrencies.
- As their name suggests, stablecoins are meant to have unchanging value relative to the U.S. dollar, in contrast to more volatile cryptocurrencies like Bitcoin.
- The bill requires companies issuing stablecoins to back their coins with safer assets like U.S. dollars or Treasurys.
- Critics including Elizabeth Warren said the bill does nothing to prevent someone from bribing the president with stablecoins: a concern because Trump and his family are heavily entangled in cryptocurrency.
A bipartisan bill regulating and promoting “stablecoin” cryptocurrencies passed in the Senate Tuesday in a 68-30 vote, giving a boost to the legitimacy of digital currencies.
The bill would set standards for companies issuing stablecoins, a type of cryptocurrency. A stablecoin’s value is meant to stay the same as an actual state-issued currency, usually the U.S. dollar, in contrast to cryptocurrencies such as Bitcoin, whose value fluctuates wildly. The bill has yet to be passed by the House of Representatives and signed into law by President Donald Trump.
The bill could give a boost to stablecoins, which are meant to solve one of the problems with cryptocurrencies in general: they are rarely used to buy and sell things, due to how much their price changes from day to day. The bill could encourage the U.S. dollar stablecoin market to grow nearly eightfold to $2 trillion over the next 10 years, Treasury Secretary Scott Bessent told Senators last week.
The bill requires companies creating stablecoins to hold actual dollars, Treasurys, or assets considered safe equal to the value of the coins they’ve issued, as a safeguard against cryptocurrencies collapsing and leaving customers with worthless bits of data, as happened with the infamous Terra-Luna stablecoin in 2022.
Corruption Concerns Brushed Aside
Senators passed the bill despite concerns about corruption raised by Democrats.
Massachusetts Senator Elizabeth Warren, a Democrat, noted that President Donald Trump and his family are heavily invested in cryptocurrency trading and criticized the bill for doing nothing to rein in the many potential conflicts of interest that poses.
Trump has a stake in World Liberty Financial, a company that launched its own stablecoin, USD1. Critics of Trump have argued the coin could be a convenient way to bribe the president, among Trump’s other crypto entanglements.
“If Congress passes this bill, USD1 won’t just be a coercive tool to pay off a corrupt President,” Warren said on the Senate floor last month. “It will be a financial instrument blessed by the United States Government. And this bill provides even more opportunities to reward buyers of Trump’s coins with favors like tariff exemptions, pardons, and government appointments.”
The bill prohibits members of Congress and the Executive Branch, but not the president and Vice President, from owning stablecoins.
Sen. Mark Warner, a Democrat from Virginia, was among the 18 Democrats who joined Republicans to pass the bill. (Two Republicans voted against it.)
“For too long, stablecoins have operated in a regulatory gray area, putting consumers, markets, and national security at risk,” he wrote in a statement. “The GENIUS Act changes that by creating guardrails for responsible innovation, setting high standards for issuers, and reining in potential abuses by big tech and bad actors.”