In a turning point for the digital asset sector, the US Senate approved a bill to establish a regulatory framework for the US-dollar-pegged cryptocurrency tokens known as stablecoins.
The GENIUS Act, which was nicknamed after Democrats and Republicans, was supported by a number of Democrats on Tuesday. It passed 68-30. Before it is submitted to President Donald Trump’s desk for approval, the House of Representatives, which is led by Republicans, must pass its version of the legislation.
Stablecoins, a type of cryptocurrency that maintains a constant value, typically a 1: 1 dollar peg, are frequently used by crypto traders to transfer funds between tokens. They are increasingly popular, and supporters claim they could be used to send payments right away.
The stablecoin bill would require issuers to publicly disclose the composition of their reserves each month and require tokens to be backed by liquid assets like US dollars and short-term Treasury bills.
Andrew Olmem, a managing partner at Mayer Brown and former National Economic Council deputy director, referred to it as “a major milestone” during Trump’s first term.
For the first time, it establishes a regulatory framework for stablecoins, a rapidly expanding financial sector, and industry.
A clear framework, according to the crypto industry, could make stablecoins more widely used, as it has long been a stance of the crypto industry for lawmakers to pass legislation establishing regulations for digital assets. The sector tried to portray the issue as bipartisan after spending more than $ 119 million supporting pro-crypto candidates in the previous year’s elections.
A stablecoin bill was passed last year in the House, but it was abandoned by the Senate, where Democrats had a majority at the time.
Inter-relationships are at stake
After being drawn in by the sector during his presidential campaign, Trump has attempted to radically alter US cryptocurrency laws.
The White House wants a stablecoin bill to be passed before August, according to Bo Hines, who is in charge of Trump’s Council of Advisers on Digital Assets.
As Democrats become more and more angry with Trump and his family members promoting their personal crypto projects, tensions on Capitol Hill have escalated to threaten to derail the digital asset sector’s hope of legislation this year.
According to Bartlett Naylor, a consumer rights advocate for Public Citizen, “Selectors forfeited their opportunity to confront Trump’s crypto grift, which is the largest, most flagrant corruption in presidential history,” in advance of these bills.
Trump’s crypto ventures include World Liberty Financial, a meme coin he coined in January, and a crypto company he partly owns.
Trump’s assets are in a trust that his children run, according to the White House, and there are no conflicts of interest.
Other Democrats argued that the bill needed stronger anti-money laundering laws and prohibitions on foreign stablecoin issuers, and that it would not stop Big Tech companies from issuing their own private stablecoins.
In remarks made on the Senate floor in May, Senator Elizabeth Warren, a Democrat, said that “a bill that turbocharges the stablecoin market is worse than no bill at all while facilitating the president’s corruption and undermining national security, financial stability, and consumer protection.”
In the House, the bill might need to be changed.
The Conference of State Bank Supervisors called for “critical changes” to be made to lessen risks of financial stability in a statement.
Source: Aljazeera
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