US passes first major national crypto legislation

US Passes Landmark Crypto Law: New Era for Stablecoins

The United States Congress has enacted its first major national cryptocurrency legislation, the "Genius Act," signaling a significant turning point for the digital asset industry. This milestone follows years of lobbying and substantial investment by the crypto sector in Washington.

The Genius Act specifically targets stablecoins, cryptocurrencies pegged one-to-one to reliable assets like the US dollar. Used primarily by traders to move funds between crypto tokens, stablecoins have seen rapid growth due to their stability. The new law mandates that these coins must be fully backed by US dollars or other low-risk assets, aiming to introduce greater confidence and integrity into this market segment.

Benefits and Backing: What Supporters Say

Supporters view the Genius Act as crucial for providing regulatory clarity, ensuring the US remains competitive in payment system innovation, and helping digital currencies go mainstream. President Trump, whose stance on crypto shifted from skepticism to support, is expected to sign the bill, influenced by his business ties and industry backing. The bill garnered notable bipartisan support, with many Democrats joining Republicans.

Concerns and Criticisms: The Risks Ahead

Critics, however, warn of new financial system risks. They argue the bill legitimizes stablecoins without adequate consumer protections, allowing tech firms to engage in bank-like activities without similar oversight. Concerns also include convoluted bankruptcy processes that could harm consumers, who might wrongly perceive these assets as entirely safe. Advocacy groups had voiced strong opposition to these potential pitfalls.

Future of US Crypto Regulation

While the Genius Act is a significant step, it's one of three crypto bills advancing. Two others, already passed by the House and now in the Senate, aim to prevent a US central bank digital currency and establish broader crypto regulation. Despite Bitcoin's recent record high of over $120,000, some analysts, like Terry Haines, believe the stablecoin bill might be the industry's only major legislative win for a while, underscoring the challenges of crypto regulation even for seemingly "easy" parts.

The passage of the Genius Act is a foundational development in US crypto policy. While it brings clarity to stablecoins, the ongoing debate over comprehensive oversight, consumer safety, and digital assets' integration into traditional finance continues. The impact of these new rules on the evolving digital economy will be closely watched.