A New Era for US Crypto Regulation
For years, the U.S. government maintained a cautious, hands-off approach to cryptocurrencies, often viewing them as too volatile for average Americans and a potential risk to the nation’s financial system. That stance has now dramatically shifted. In a historic week for digital assets, the U.S. House of Representatives approved the country’s first-ever major crypto legislation, signalling a profound change in the nation’s approach to these digital currencies. This legislative breakthrough immediately resonated across the sector, with the overall market valuation of cryptocurrencies hitting a record $4 trillion soon after the vote. Capping off this momentous week, President Donald Trump, who has publicly vowed to make America the “crypto capital of the planet,” officially signed the bill into law during a White House ceremony, to the resounding cheers of Republican lawmakers.
The Landmark GENIUS Act Signed into Law
At the heart of this legislative triumph is the GENIUS Act, now officially signed into law by President Trump. “This afternoon, we take a giant step to cement American dominance of global finance and crypto technology as we signed the landmark Genius Act into law,” President Trump stated. This groundbreaking legislation establishes new rules specifically for stablecoins, a promising segment of the crypto market valued at $250 billion. Stablecoins are widely regarded as a relatively safer type of cryptocurrency, as their value is pegged to other stable assets, such as the U.S. dollar, ensuring a more predictable valuation. The GENIUS Act mandates that stablecoin companies maintain proper reserves and be transparent about how funds are held, while also establishing anti-money laundering (AML) rules to deter illicit activities.
Beyond Stablecoins: Other Key Legislation
The GENIUS Act is just the beginning of a broader legislative push in the crypto space. Two other significant crypto-related bills are currently making their way through Congress, further shaping the future regulatory landscape. The CLARITY Act, also passed by the House on Thursday as part of “crypto week,” aims to regulate digital commodities beyond stablecoins. This bill proposes handing policing power of the crypto sector to the Commodity Futures Trading Commission (CFTC), a move that crypto advocates see as a favourable shift from the Securities and Exchange Commission (SEC), which had taken a more antagonistic stance under the previous administration. Additionally, the Anti-CBDC Surveillance State Act was approved, explicitly preventing the Federal Reserve from issuing any retail central bank digital currency directly to Americans, addressing concerns about financial privacy.
Crypto Advocates Envision Financial Innovation
For crypto supporters, this past week was undeniably a moment to savour. They have long championed digital currencies as representing the future of finance, believing they offer real value despite acknowledging the more speculative corners of the sector, such as “meme coins.” Stablecoins are a prime example of this perceived value, as their backing by dollars or other currencies makes them effectively as good as cash.
Key industry players foresee stablecoins revolutionising global commerce, enabling instantaneous money transfers across borders without the onerous and expensive bank or traditional money transfer fees. Companies receiving stablecoins can seamlessly convert them into real dollars, a “gamechanger” that industry leaders like Kevin Lehtiniitty, CEO of Borderless.xyz, predict will make stablecoins the default method for commerce within the next two decades.
Read More: US Crypto Bills Advance House Ends Record Stalemate With Donald Trump
Critics Warn of Potential Financial Pitfalls
Despite the celebratory mood among crypto advocates, critics view these legislative developments with significant apprehension, fearing a potential financial disaster in the making. While acknowledging that the GENIUS Act does offer some protections, such as mandating proper reserves and implementing AML rules, critics argue that the regulations are too weak.
They contend that the legislation has been unduly influenced by the crypto industry’s heavy lobbying efforts and substantial campaign donations, with over $100 million spent in Congressional races last year and an even larger war chest being built for upcoming midterms. Amanda Fischer, policy director for Better Markets, asserts that the bill fails to solve existing payment system problems and could exacerbate many, ultimately hurting consumers and the broader economy if stablecoins are adopted without adequate protections.
President Trump’s Unwavering Crypto Support
The crypto sector’s recent legislative victories are significantly bolstered by the unwavering support of President Donald Trump. His administration’s clear backing provides a powerful political tailwind for the industry. President Trump and his family have controversially deepened their involvement in the crypto sector, with financial interests in World Liberty Financial, a company that is actively investing in various aspects of the industry, including the launch of its own stablecoin. This direct engagement from the highest office signals a long-term commitment to fostering the growth of digital assets in the U.S., providing the crypto industry with a formidable ally in its ongoing efforts to shape policy.
The Road Ahead for US Crypto Policy
With the historic passage of the GENIUS Act, the crypto industry is marching forward, confident that the wind is on its side. The next major target for the crypto sector is now the CLARITY Act, which seeks to reallocate some policing power from the Securities and Exchange Commission (SEC), widely seen as Wall Street’s primary regulator. Under its previous chairman, Gary Gensler, the SEC had adopted a stringent approach towards the crypto sector, leading to numerous enforcement actions. Crypto companies have long maintained that digital currencies are a new, innovative financial product requiring a distinct set of rules. While critics warn of potential risks from less oversight, the industry believes that establishing tailored regulations is crucial for fostering innovation and growth, setting the stage for continued debate and evolution in US crypto policy.
