GENIUS Act Passed by U.S. Senate: A Historic Step Toward Stablecoins

GENIUS Act Sparks Crypto Reform: Promise or Political Power Play?

There’s going to be a major spark in the crypto industry as U.S.’s Senate passed the GENIUS Act to govern cryptocurrency in the state. The Bill is first of its kind in U.S. history. The stated bill also focuses on stablecoins, a type of cryptocurrency. As the bill passed with the majority of 38 votes in a 68-30 bipartisan vote, now it proceeds toward the House.

It can be said that the initiation of this bill holds connection with President Donald Trump’s avid interest in the crypto market, as he keeps on a crypto-friendly environment from the starting of his second tenure. On the other side, some people are concerned about the Bill, going to be a law. So, now the question is what GENIUS Act is, what is its lap, and how it’s supposed to be a revolutionized act in the crypto world.

WHAT IS GENIUS ACT?

The GENIUS stands for Guiding and Establishment National Innovation for U.S. Stablecoins. It is the first bill of the U.S., introduced to deal in the regulations of the cryptocurrencies. Here its main focus is on stablecoins, which is a part of cryptocurrencies. STABLECOINS- a type of cryptocurrency, which is pegged with equal ratio to the real assets like fiat (USD, INR), gold, etc. which makes it more secure as compare to other cryptocurrencies that are at the risk of volatility.

If the bill passed and enacted as a law, it would bring more clarity in the market ethics as stablecoins are not completely invulnerable. Interest in the trading of crypto is going to bring a boom in this market.  Stablecoins are going to be more acceptable and contribute to growth.

KEY POINTS OF GENIUS ACT

• Transparency through monthly auditing as the third party auditors will check the flow or records.

•  It is mandatory for stablecoin issuers to register only after proving that they have the minimum liquidity to meet out the demands of backing if needed.  

• Stablecoin issuers cannot integrate the customers’ capital to the company’s capital. So, if the company somehow went bankrupt this provision protects the investments of customers from the company's loss.

• As most of the cryptocurrencies are not bound to centralize and being out of governments’ control give flames to unusual activities through these platforms. This Bill mentions the rules and processes to quash illegal activities like terrorism funding and money-laundering.

• Stablecoins are only issued to registered authorities, and if some companies want to issue their own stablecoins it requires them to register first and then they are liable to provide these facilities to other registered ones. This point backs the prevention of currency exposure and frauds.

• The Department of Treasury, Federal Reserve, Office of the Comptroller of the Currency and FDIC have the most administrative control. Making it totally under the supervision of the government.

• Mention the norms to make the stablecoin world more stable as stating the rules for companies to pay customers first in case of bankruptcy. Making their investments more credible.

THE IMPACT OF GENIUS ACT ON CRYPTO MARKET

If the GENIUS Act comes into force, it is going to provide more confidence in the sector as it sheds light on the rules and regulations for the market of crypto investments. Rules entrusted the user with the authenticity of the projects. The Bill zeros in on customers’ protection and empowering credence in the sector. This is also necessary because the crypto market has been facing cynicism for the past few years.

The outrage of FTX in the year 2022, leads to a huge distrust in the market, after the detention of company’s owner Sam Bankman-Fried. A large number of investors lost millions in this mess. Things didn’t stop there as another fuss took place in the same year when TERRA (a kind of stablecoin) also collapsed because of its frail designing and vulnerable algorithms against handling pressure. This chain of incidents led to the loss of confidence in cryptocurrencies and the market slipped into a slump.

But crypto is restoring its popularity steadily, and the GENIUS act will give rise to its growth. Norms and regulations prompt the trust in crypto, ensuring that it has to be treated as a legitimated currency. It states how stablecoins are used, protection and measures for investors, and guidelines for stablecoin issuers.

THE VARIED RESPONSES TO THE BILL

A revolutionary action

While the bill is supported by republicans in one voice, 18 out of the 45 democrats of the senate also went along with the proposal. It shows the great fame of the Bill that Tim Scott, chairman of senate banking committee outlined the Bill –a bold step forward, for clearing the clouds over the market.

In a line with expectations, the Bill was endorsed by crypto companies. Big players like Coinbase, Gemini, and Ripple have already approved the bill cordially by giving assent. The Bill in itself is the Yield result of the crypto focused PACs (Political Action Committees) and the settlement of their millions of dollars (more than $197 millions )spent to influence the election in the favor of crypto prospective minds in power.

UNDER FIRE DUE TO THE ALLEGATION OF CORRUPTION’S SOURCE

On the contrary, not everyone in the senate is a fan of this bill and alleged it to be derailed in a short time. Democratic senator Elizabeth Warren commented on its integrity that it will drift away with its original purpose of providing ease to the crypto investors and becoming another source of corruption. Jack Reed, another senator, supported the statement.  

The worries that are taking place in context of the law are genuine because President Donald Trumps pocketed $57.4 million in 2024, from his family-owned company, World Liberty Financial, a crypto venture. And now the newly proposed bill prohibited the members of congress and senior officials to own or issue any stablecoins during their service tenure. While Presidents’ generated wealth is out of this bill’s reach.   

AN OVERVIEW

Currently the GENIUS Act is showing the potential of only being fruitful to the crypto traders and showing its core objective to set regulations for the betterment of this sector so it could contribute to the country’s growth. The confidence that has been tripped because of some past events, will be revived by this act. However, the grey areas, visible from a distance, still spark concerns about its actual motive. Is it actually going to benefit only commoners or the people in the special powers are the one behind its proposal. It is directly hinted at by the results of elections, which is clearly dominated by the crypto strategic nominees and the amount of investments to bring them into power.