On June 17th, the Senate voted 68-33 to pass the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
The bill promotes the usage of a particular category of cryptocurrency product known as stablecoin. Stablecoins are unique since their value is pegged to the value of other assets such as fiat currencies or commodities like gold to hedge against price volatility typical of digital assets.
The GENIUS Act would catalyze the adoption of stablecoins as a mainstream financial instrument by adopting clear, simple rules and definitions while streamlining procedures and licensing for issuers. Under the GENIUS Act, stablecoin issuers simply follow existing guidance from the Federal Reserve’s framework for depository institutions and the Office of the Comptroller of the Currency’s (OCC) framework for nonbanks.
With the passage of the GENIUS Act in the Senate, stablecoin issuers can now refer to a clear set of rules when making decisions, ending the threat of retroactive penalties. The GENIUS Act represents a stark departure from the policies of the Biden Administration. The SEC developed a notorious reputation for its arbitrary enforcement actions against crypto dealers and issuers. According to the Georgetown Law Center on Transnational Business and Law, “the SEC initiated 125 cryptocurrency-related enforcement actions, resolving 98 with $6.05 billion in penalties, nearly four times the amount under the prior administration.” Regulators wound up stifling crypto’s adoption by the wider market.
The Stablecoin market is already estimated to be worth around $250 billion. Treasury Secretary Scott Bessent cited a report while testifying to Congress earlier this month, estimating the market cap of stablecoins could reach $2 trillion by 2030. By passing the GENIUS Act, the Senate is helping to spur innovation and speed up the deployment of financial technologies that will improve consumer choice, increase demand for US treasuries, and potentially lower the cost of cross-border payments.
Stablecoins also expand financial inclusion, improve consumer choice, and offer lower transaction costs for cross-border payments. Online payment processors such as Stripe already enable consumers to pay merchants with stablecoins. Cross-border transaction fees involving stablecoin are a fraction of those incurred by traditional payment methods when remitting money abroad.
Another wider benefit of the GENIUS Act is that it would help further bolster the integrity and strength of the US dollar. Since the US dollar and dollar-linked assets back the overwhelming majority of stablecoins, the US dollar and US treasury market will enjoy increased demand as the stablecoin industry expands globally. Not only will the dollar be poised to become the de facto reserve currency for stablecoin issuers, but increased demand and liquidity from a new source of buyers at treasury auctions could generate additional benefits such as lower borrowing rates.
ATR urges members of the House of Representatives to swiftly pass the GENIUS Act and secure a golden opportunity to make America a global hub for cryptocurrency users and issuers.
