House Passes GENIUS Act for Stablecoin Regulation, Awaits Presidential Approval

The U.S. House of Representatives has passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), marking a significant step toward federal regulation of stablecoins—cryptocurrencies pegged to stable assets like the U.S. dollar. The bill, which previously received bipartisan approval in the Senate, now awaits President Donald Trump's signature to become law.

The GENIUS Act introduces a comprehensive regulatory framework for stablecoin issuers, mandating full reserve backing, regular audits, and strict compliance with anti-money laundering regulations. It also grants the Department of the Treasury extensive authority over the stablecoin market, allowing a diverse range of entities—including banks, fintech companies, and major retailers—to issue stablecoins or integrate them into existing payment systems.

The legislation has sparked debate over potential conflicts of interest, given President Trump's financial involvement in cryptocurrency ventures. Reports indicate that President Trump earned $57 million from token sales in 2024 and holds significant holdings in World Liberty Financial's USD1 stablecoin. Critics argue that the legislation could enable the President to leverage his position for personal financial gain. Senator Elizabeth Warren expressed apprehension that the bill might allow the President to "trade presidential favors like tariff exemptions, pardons, and government appointments for hundreds of millions, perhaps billions of dollars from foreign governments."

The rise of dollar-backed stablecoins has prompted varied responses from central banks worldwide. While the U.S. views private stablecoins as tools to project the strength of the dollar, other central banks and regulators, including the Bank for International Settlements, warn that unchecked expansion of these crypto assets could threaten monetary sovereignty and financial stability. Some countries are developing central bank digital currencies (CBDCs) to counter the influence of dollar-backed stablecoins. However, adoption has faced challenges, exemplified by Nigeria’s largely unsuccessful e-naira. The dominance of U.S.-backed stablecoins—currently totaling $250 billion—is expected to grow significantly, potentially sidelining countries that fail to adapt.

The enactment of the GENIUS Act is poised to have profound social and economic impacts. By providing a clear regulatory framework, the Act aims to legitimize stablecoins, potentially increasing consumer trust and broader adoption. Stablecoins can offer faster and more affordable financial services, particularly benefiting unbanked and underbanked populations. The entry of major retailers and fintech companies into the stablecoin market could disrupt traditional payment systems, fostering innovation and competition.

This legislative move is unprecedented in the U.S., representing the first comprehensive federal regulation of stablecoins. While other countries have explored or implemented CBDCs, the U.S. approach focuses on integrating private stablecoins into the existing financial system under federal oversight.

The passage of the GENIUS Act by the U.S. House represents a pivotal moment in the regulation of digital assets, with far-reaching implications for the financial industry, global monetary systems, and political discourse. As the bill awaits presidential approval, stakeholders across sectors will be closely monitoring its potential impacts and the evolving landscape of cryptocurrency regulation.