The much-anticipated crypto regulations in the United States are finally gaining momentum after years of delay. Following the 2022 FTX collapse, the Biden administration has consistently underscored the urgent need for establishing crypto regulations. Despite facing months of resistance, primarily from Republicans, the proposed cryptocurrency law is on the verge of approval, marking a significant milestone.
US Cryptocurrency Legislation
The GENIUS Act, previously detailed numerous times, is a key component of the newly formulated US Senate regulations on stablecoins. Parallel efforts are also ongoing in the House of Representatives, where voting on the National Innovation Steering and Establishment Act, known as GENIUS, concluded with a favorable outcome of 68 to 30 votes. Senate Banking Committee Chairman Tim Scott described the legislation as an essential victory for both innovation and US interests.
New York Senator Chuck Schumer, Minnesota Senator Amy Klobuchar, and Massachusetts Senator Elizabeth Warren predictably voted against the act. However, it garnered support from Democratic Senators in Arizona and other states, indicating bipartisan collaboration.
GENIUS Act Provisions
The GENIUS Act mandates that stablecoins be fully backed by US dollars or liquid assets, aiming to prevent scenarios similar to the UST debacle and unbacked stablecoin issuance. The legislation also introduces annual audits for issuers exceeding a market capitalization of $50 billion, affecting entities like Tether. Despite Tether’s non-US base, it will be regularly audited, significantly enhancing trust in cryptocurrencies.
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Progressing Through Legislative Hurdles
The legislative process is advancing with an impending final vote. Former President Trump previously desired the crypto bill on his desk by August. By shortening debates, both parties will facilitate the next steps early next week.
In tandem, the House is progressing the STABLE stablecoin act, which passed committee approval in May with a 32-17 vote. This bill has yet to reach a full House vote. Both GENIUS and STABLE need to proceed in tandem, ultimately combining through a conciliation committee.
The bipartisan support witnessed in the Senate holds promise for the House as well. If this momentum maintains, the legislative framework could be finalized and sent to Trump’s attention by August.
