U.S. Senate Progresses on GENIUS Act, Paving Way for Initial Regulations of Stablecoins
Speeding Up the Game: Senate Pushes for Stablecoin Regulation
Content Overview
The GENIUS Act, a Senate bill, is making waves as it steams towards becoming the first comprehensive U.S. regulatory framework for stablecoins. Here's what you need to know:
Table of Contents
- Hitting the Fast Track: Senate Majority Leader John Thune's Push for a Vote
- Bipartisan Support for the GENIUS Act
- Battle of the Bills: Differences Between Senate's GENIUS Act and House's STABLE Bill
- The Opposition: Empowering Nonbank Entities or a Shady Threat to Traditional Banking?
- Crypto Communication: Industry Split, Coinbase's Tactic, and the Future of Stablecoins
Hitting the Fast Track: Senate Majority Leader John Thune's Push for a Vote
With a swift move, Senate Majority Leader John Thune initiated procedures on Wednesday to expedite a vote on the GENIUS Act. This bill, sponsored by Senator Bill Hagerty and co-sponsored by Senators Tim Scott (R-SC) and Cynthia Lummis (R-WY), aims to regulate dollar-pegged stablecoins.
Bipartisan Support for the GENIUS Act
The bill scored a strong bipartisan win in the Senate Banking Committee, with an 18-6 vote in favor. Senators Scott, who serves as the National Republican Senatorial Committee's chair, praised the bill as a "critical first step" in fulfilling President Donald Trump's mandate to advance a regulatory framework for digital assets.
Battle of the Bills: Differences Between Senate's GENIUS Act and House's STABLE Bill
While both bills share the goal of regulating stablecoins, the Senate's GENIUS Act and the House's STABLE Bill differ significantly in three key areas:
- Allowing money market funds to be used as reserves
- Differing regulatory approaches for a $10 billion threshold
- Contrasting positions on algorithmic stablecoins, with the STABLE Bill imposing a two-year moratorium, while the GENIUS Act only requires a brief study.
The Opposition: Empowering Nonbank Entities or a Shady Threat to Traditional Banking?
Despite the bill's momentum, traditional banking advocates argue against the bill, claiming it could create "shadow deposits" that could undermine banks. Arthur Wilmarth, Professor Emeritus of Law at The George Washington University, labels the GENIUS Act as "deeply flawed" and raises warnings about potential dangers to consumers and the broader financial system.
Meanwhile, Wilmarth fears that the bill could allow Big Tech companies and other commercial enterprises to acquire non-bank stablecoin issuers, giving these firms a pathway to enter the banking industry.
Crypto Communication: Industry Split, Coinbase's Tactic, and the Future of Stablecoins
Rumors suggest that Coinbase, the largest crypto firm in the U.S., is allegedly trying to prevent both the GENIUS Act and the STABLE Act from reaching floor votes. Tech venture capital firm Andreessen Horowitz has been rumored to be "sympathetic" to delaying votes on stablecoin legislation and is reportedly assisting Coinbase in these efforts. This disparity within the crypto industry reflects their differing opinions about the proposed regulatory frameworks.
The GENIUS Act is not only about stablecoins but also about cementing U.S. dollar dominance in global finance. Its broader objective reflects the ongoing concern about maintaining America's financial leadership in an increasingly digital global economy. This bill marks the first significant attempt by U.S. lawmakers to create clear rules for the quickly expanding stablecoin sector, which has become a vital component of the cryptocurrency ecosystem.
Sources:
- CoinDesk
- CNN Business, Investopedia
- Open Secrets
- Forbes
- Kleiman Law
- CNBC
- Bloomberg
- The New York Times
- The GENIUS Act, a proposed regulatory framework for stablecoins in cryptocurrency, is gaining traction and is being likened to a potential shady threat to traditional banking, allegedly empowering nonbank entities.
- Amidst the debate, Coinbase, a leading figure in the crypto business, is rumored to be strategically preventing both the GENIUS Act and the STABLE Act from reaching the floor, with tech venture capital firm Andreessen Horowitz estimated to aid in these efforts.
- While the bills share a common goal, the US Senate's GENIUS Act and the House's STABLE Bill differ notably in aspects such as fund reserves, regulatory thresholds, and algorithmic stablecoins.
- The Senate Majority Leader John Thune has accelerated procedures to expedite a vote on the GENIUS Act, sponsored by Senator Bill Hagerty, highlighting the bill's significance in advancing a federal regulatory system for digital assets.
- Despite the strong bipartisan support for the GENIUS Act, traditional banking advocates caution that it could create 'shadow deposits,' potentially undermining the established banking sector. This potential regulation could have far-reaching implications for the banking, finance, technology, and business sectors.
