US Senate Passes the GENIUS Act to Regulate Crypto

The U.S. Senate recently voted 66-22 to move forward with the GENIUS Act, a new proposal focused on regulating parts of the crypto world. While the bill stirred debate in recent weeks, especially among Democrats skeptical of President Donald Trump’s involvement in crypto ventures, it still earned the backing of 16 Democrats, including Senators Cory Booker and Adam Schiff.

At its core, the GENIUS Act aims to put clear rules in place for stablecoins, a specific type of digital currency that’s typically tied to a traditional asset like the USD. Supporters say these regulations will bring more security for users and help establish a more consistent framework for crypto businesses to follow, potentially making stablecoins more useful for everyday financial transactions.

Critics, however, argue that the measure falls short when it comes to preventing conflicts of interest, especially in light of Trump’s recent crypto-related activities. They say the bill’s protections are too weak and could leave both consumers and the economy exposed to unnecessary risks.

MIT’s Cryptoeconomics Lab founder Christian Catalini, a vocal supporter of the bill, believes it will accelerate the use of stablecoins in mainstream finance. In his view, the legislation gives the market clearer boundaries, helping consumers by shifting the competition toward better products instead of leaving individuals to figure out which crypto companies are trustworthy.

The bill introduces requirements for companies that issue stablecoins, including maintaining reserves equal to the value of the digital coins they issue. This is intended to ensure that people can retrieve their funds even if a large number of users decide to sell their coins all at once. In case an issuer goes bankrupt, the bill would give coin holders top priority in getting their money back. It also requires these firms to follow rules meant to stop money laundering and comply with counter-terrorism sanctions.

Senator Elizabeth Warren criticized it as a flimsy attempt that benefits the industry more than the public. She expressed concern that the law opens the door for political favors tied to stablecoin investments, especially in light of Trump’s involvement. In March, a stablecoin called USD1, backed by Trump-linked World Liberty Financial, was used by an Abu Dhabi-based firm to invest $2 billion in Binance. Trump denies any misconduct.

While the legislation includes a clause barring members of Congress and top executive officials from launching stablecoins while in office, Warren said this doesn’t go far enough.

It remains to been how crypto industry companies like Stronghold Digital Mining Inc. (NASDAQ: SDIG) will receive this new law if it ever gets enacted and what suggestions they have for other regulatory gaps that need to be filled.

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