Crypto week ends on high note

Congressional leaders delivered on their promise to pass legislation this week establishing the first-ever set of federal rules governing the U.S. stablecoin market. Stablecoins are digital assets (or cryptocurrencies) pegged to instruments with fixed monetary value, such as the U.S. dollar.

In a recent interview on CNBC, Zach Abrams, co-founder of stablecoin platform Bridge (which recently was acquired by credit card processor Stripe) put the value of the stablecoin market at $400 billion. "That could easily grow to $2 trillion, by 2028," he said.

The Guiding and Establishing National Innovation in U.S. Stablecoins (GENIUS) Act, which garnered Senate approval last month, was approved by the House on Thurs., July 17, and President Trump signed it into law on Fri., July 18. Supporters said it could provide faster and cheaper forms of payments that can move around the clock and across platforms.

The GENIUS Act was one of three crypto-oriented bills passed by the House this week. The others—the CLARITY Act (which is short for the Digital Asset Market Clarity Act) and the Anti-CBDC (central bank digital currency) Surveillance Act—are now headed to the Senate for consideration.

GENIUS Act had bipartisan support

The GENIUS Act was crafted by Senator Tim Scott, R-S.C., chairman of the Senate Banking Committee, and attracted co-sponsors from both the Democratic and Republican parties. "The GENIUS Act marks a major milestone in securing America's leadership in payments and innovation while protecting consumers and strengthening our national security," Sen. Scott said following House passage of the law.

"This bill is critical to delivering on President Trump's agenda to cement the United States as the crypto capital of the world," Scott noted adding that he was hoping for quick action on the CLARITY Act, which would set up a regulatory framework for all types of digital assets, including cryptocurrencies. "Digital assets and blockchain technology are here to stay, and it's past time for our regulatory framework to acknowledge this reality," Scott said.

"The passing of the GENIUS Act is a defining moment for the stablecoin ecosystem – not because it signals that regulation is coming, but because it finally begins to clarify how stablecoins will be treated as part of the financial system," said Yi Luo, founder and CEO of Eunice, which has been building a stablecoin compliance platform.

"For years, stablecoins have operated in a grey zone: systematically important to digital markets, increasingly relied upon by institutions, yet lacking any cohesive framework for oversight or accountability," Luo added, "The GENIUS Act "introduces a regulatory logic that places stablecoins within the broader financial infrastructure conversation."

Paul Atkins, chairman of the Securities and Exchange Commission, described the GENIUS Act as providing "clear rules of the road" for stablecoins.

Specifically, it:

• Establishes concrete procedures for institutions seeking licenses to issue stablecoins;
• Sets reserve requirements;
• Establishes supervisory, examination and enforcement regimes for issuers;
• Sets up regulatory frameworks that rely on existing regulators to oversee depository institutions and nonbanks that issue more than $10 billion of stablecoins. The Federal Reserve has been tapped to create a regulatory framework for depository institutions that meet this threshold, while the Office of the Comptroller of the Currency's framework will apply to nonbanks;
• Allows for state regulation of issuers with less than $10 billion in market capitalization, and a waiver process for issuers exceeding the threshold to remain state-regulated.

"I look forward to watching the market leverage the regulatory framework provided by the GENIUS Act to go to market with payment stablecoins solutions that make transactions quicker, cheaper and safer – all while maintaining robust risk safeguards," Atkins said.

Getting regulatory clarity

The CLARITY Act is a market structure bill that aims to settle a long-standing debate over whether crypto assets should be regulated by the Securities and Exchange Commission or the Commodities Futures Trading Commission.

"Today, the House passed landmark legislation that establishes clear rules of the road by creating a functional regulatory framework for digital assets," said Representative French Hill, R-Ark., who wrote the bill and chairs the House Financial Services Committee.

The bill, which enjoys bipartisan support, clarifies when a cryptocurrency is deemed a security and subject to SEC oversight and when it is defined as a commodity and thus falls under the jurisdiction of the CFTC. It also "prioritizes consumer protection and American innovation," Rep. Hill said in introducing the legislation in May.

Just say no to Fed crypto

The Anti-CBDC Surveillance State Act, proposed by Representative Tom Emmer, R-Minn., seeks to codify an executive order issued by President Trump prohibiting the Federal Reserve from issuing a central bank digital currency directly or indirectly to individuals through the banking system. Emmer is the majority whip in the House, which makes him the second most powerful Republican in that chamber.

CBDCs have garnered some traction, with the central banks of several countries piloting or investigating issuance. U.S. banks and other entities are adamantly opposed to the idea, however, primarily due to concerns about financial privacy. A 2023 poll sponsored by the Cato Institute found a majority of Americans (84 percent) oppose the government issuing digital currencies.

"A fundamental choice is at stake about the future of money in America – a choice between privacy and government control," Hill said.

Testifying before the Senate Banking Committee earlier this year, Fed Chairman Jerome Powell said there will be no CBDCs here in the United States as long as he chairs the Fed.

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