Industry Praises Slate of Crypto Bills, Economists Unsure of Promise

Congress and President Donald Trump have taken significant steps toward regulating digital currency with the passage of a package of bills on Capitol Hill. Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or GENIUS Act, into law last week. This legislation establishes a framework for regulating stablecoins, a form of cryptocurrency backed by stable assets. Industry stakeholders have applauded the law, stating it will enable the United States to lead in digital finance. However, economists remain divided on whether it will be the consumer-focused game-changer it is portrayed to be.

"The passage of the GENIUS Act represents an important step toward establishing a clear regulatory foundation for the digital asset industry in the United States," said Paolo Ardoino, CEO of cryptocurrency company Tether. "The U.S. now has the opportunity to reassert its leadership in digital finance by supporting open networks and programmable money. Stablecoins have become essential infrastructure in global markets, powering dollar access, enhancing cross-border settlements, and strengthening financial resilience."

The GENIUS Act is part of a broader legislative push. The House also passed two additional bills last week related to cryptocurrency: the Digital Asset Market Clarity Act and the Anti-CBDC Act. Both bills must pass the Senate to become law. Aaron Klein, senior fellow at the Brookings Institution, told UPI that these legislative actions signal to consumers that cryptocurrency is here to stay.

"It's something the government is passively and explicitly supporting," Klein said. "The enthusiasm by Congress and by the president personally issuing his own crypto for his own financial gain is a giant signal for the American public. Many of them will see this as a green light and won't look at the fine print."

GENIUS Act Overview

The GENIUS Act enables the government to regulate licensure and permissions for stablecoin companies to offer and sell stablecoins in the U.S. It also empowers federal authorities to enforce regulations through fines and imprisonment for violations. Issuers of stablecoins must have sufficient capital backing and comply with reporting and auditing requirements. U.S.-regulated stablecoins must be backed by the U.S. dollar or Treasury bills, potentially extending dollar access worldwide. Joshua Robert Hendrickson, economics professor at Ole Miss, noted:

"This creates a new market but also a passive demand for U.S. government debt. By doing so it potentially weakens the mechanism by which rising debt tends to lead to higher borrowing costs."

Christian Catalini, founder of the MIT Cryptoeconomics Lab, views the law as a strong foundation for mainstream adoption.

"No bill is perfect, but this is a great starting point for mainstream adoption to begin," Catalini said. "I'm sure there will be further adjustments along the way as we learn more about the strengths and weaknesses of the current law."

Licensing is open not only to traditional financial institutions but also to fintech companies.

"I expect lots of entry by U.S. banks, fintechs and digital wallets," Catalini said. "Some foreign fintechs and neobanks will use this as an opportunity to expand their U.S. presence and services."

Klein expressed concerns about the treatment of foreign companies under the GENIUS Act, particularly regarding auditing standards.

"One of the big loopholes in the GENIUS Act is the ability to certify to an American standard that the stablecoin issuers' audited financial statements are accurate and of high-quality," Klein said. "The first test of the GENIUS Act will come in how the foreign-issued stablecoins like Tether are treated in their auditing. Because Tether does not use U.S. auditing standards for their account."

Klein also doubts that stablecoin adoption will significantly improve U.S. payment systems, noting that real-time bank transactions have existed in countries like Brazil, Mexico, England, and Japan for years.

"You don't need stablecoins to have real-time payments," Klein said. "You need a Federal Reserve that cares about working people which we haven't seen for decades. Instead the Federal Reserve has prioritized bank profits from overdraft fees over helping people have access to their own money."

He cautioned that passing the bill does not guarantee effectiveness; federal regulators must implement and enforce policies properly.

"In 1994, Congress passed a law requiring the Federal Reserve to regulate subprime mortgages and they didn't do it," Klein said. "Alan Greenspan said we don't need to regulate this market. Look how that worked out."

Bills Advancing in Congress

The Anti-CBDC Surveillance State Act prohibits the Federal Reserve from issuing a central bank digital currency (CBDC). This bill was sponsored by Rep. Tom Emmer, R-Minn., who expressed concerns about privacy and government surveillance.

"Unlike decentralized digital assets, a CBDC is a digital form of sovereign currency that is designed, issued, and monitored by the federal government," Emmer said. "If designed without the privacy protections of cash, this could give the federal government the ability to surveil and restrict Americans' transactions and monitor every aspect of our daily lives."

Hendrickson argued that a centralized digital currency addresses a problem that may not exist.

"People say it would give greater access to FDIC services for those without bank accounts," he said. "But the number one reason people don't have bank accounts is they don't trust banks. So it's unclear why they would trust a central bank."

The Digital Asset Market Clarity Act aims to establish a regulatory framework by defining digital commodities and assigning oversight to the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The SEC would regulate cryptocurrencies offered as investment options. Hendrickson noted that recent financial scandals accelerated the push for regulation.

"At the time, all regulation of cryptocurrency was happening through SEC enforcement," he said. "You would find out you broke a rule when the SEC brought charges against you. That's not an effective way to regulate an industry. The collapse of FTX was a catalyst for both politicians and people in the industry to say, look, now is the time to get a regulatory framework in place for these kinds of things."

Frequently Asked Questions (FAQ)

What is the GENIUS Act?

The GENIUS Act provides a regulatory framework for stablecoins in the U.S., ensuring issuers have sufficient capital backing and comply with auditing requirements.

What are the objectives of the GENIUS Act?

It aims to establish U.S. leadership in digital finance, regulate licensure for stablecoin companies, and potentially extend dollar access worldwide.

What are stablecoins backed by under the GENIUS Act?

U.S.-regulated stablecoins must be backed by the U.S. dollar or Treasury bills.

What are the concerns regarding the GENIUS Act?

Concerns include foreign companies' auditing standards and whether stablecoin adoption will improve U.S. payment systems.

What does the Anti-CBDC Act propose?

This act prohibits the Federal Reserve from issuing central bank digital currency, focusing on privacy and preventing government surveillance.

Crypto Market's Take

As the legislative landscape around cryptocurrency evolves, platforms like Crypto Market are poised to leverage new legal frameworks to enhance their services. The GENIUS Act aligns with our mission to provide secure, regulatory-compliant trading solutions that can accommodate both traditional financial institutions and cutting-edge fintech companies. Our platform's emphasis on comprehensive market intelligence and AI-driven trading aligns with this regulatory shift, offering users the tools they need to navigate the increasingly structured world of digital finance.

Industry praises slate of crypto bills, economists unsure of promise