The House passed bills that establish the first federal framework for dollar-backed stablecoins and outline how other digital assets will be regulated, major victories for an industry that has pushed for more favorable oversight in Washington, D.C.
The stablecoin legislation known as the GENIUS Act will go directly the desk of President Trump, who pushed for that law as part of his wider aim to help make the US “the crypto capital of the planet.” It passed 308-122.
Two other bills passed by the House known as the CBDC Anti-Surveillance State Act and the CLARITY Act will now go to the Senate, where their ultimate fates are still unknown.
They prohibit the creation of central bank digital currencies and assign oversight over all digital assets except stablecoins to either the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC).
The passage of all three bills came after a series of roadblocks and delays as GOP leaders struggled to bring some Republican holdouts in line during a week dubbed “Crypto Week” by backers of the legislation.
President Trump at the White House. (AP Photo/Alex Brandon) ·ASSOCIATED PRESS
Trump is also deepening his own financial involvement in cryptocurrencies with several separate ventures. They include World Liberty Financial, a new crypto startup backed by Trump and his sons that has already launched its own US-dollar-pegged stablecoin (USD1) in partnership with BitGo.
Stocks with crypto ties have been surging recently as investors anticipated the moves in the nation’s capital, notably Coinbase (COIN), Robinhood (HOOD), and newly public stablecoin issuer Circle (CRCL).
Read more: Can you buy crypto with a credit card? See the pros and cons.
The GENIUS Act passed by the House on Thursday outlines how US companies can issue and manage dollar-backed stablecoins for payments, giving those digital assets a massive stamp of approval that is expected to encourage wider adoption.
It bans members of Congress and their families from earning profits from stablecoins, but not Trump and his family, an omission that irked some Democrats and slowed progress on the legislation earlier this spring.
Jeremy Allaire, CEO and co-founder of stablecoin issuer Circle Internet Group, celebrates ringing the opening bell on June 5, the day of the company’s IPO. (Reuters/Brendan McDermid) ·REUTERS / Reuters
The legislation is expected to unleash a wave of new stablecoin entrants as traditional companies ranging from banks to megaretailers consider whether to issue their own coins.
“Banks and nonbanks have parity here, so I think the banks will be able to compete in this new payments regime,” said Patrick McHenry, the former Republican congressman and House Financial Services chair who helped move forward an earlier iteration of the stablecoin bill in the last Congress.
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JPMorgan Chase (JPM) CEO Jamie Dimon and Citigroup (C) CEO Jane Fraser both said Tuesday they are planning to get involved in stablecoins, the latest evidence of how Wall Street is pivoting to embrace digital assets. Big banks have convened to explore prospects for launching a collaborative stablecoin network.
Dimon, a longtime skeptic of cryptocurrencies, said the bank needs to embrace stablecoins as a way to keep pace with payment rivals. Last month, JPMorgan announced plans to launch a so-called deposit token called JPMD that is somewhat like a stablecoin but available only to JPMorgan’s institutional clients.
“We’re going to be involved in both JPMorgan deposit coin and stablecoins to understand it, to be good at it,” Dimon said.
Other banks are also paying attention.
“I think it’s real. I think it’s here to stay. I think it’s a little overhyped at this point, but we’ll figure out the best way that we can get involved,” Bruce Van Saun, CEO of Citizens Financial Group (CFG), told Yahoo Finance.
CEO of JPMorgan Chase, Jamie Dimon. (Photo by Noam Galai/Getty Images) ·Noam Galai via Getty Images
The Wall Street Journal has separately reported that Amazon (AMZN) and Walmart (WMT) are exploring stablecoin opportunities.
The new wave of competition could upend the traditional payment system, especially if merchants seek to use stablecoins as a way to get around conventional card-based networks such as Visa (V) and Mastercard (MA).
The legislation also would empower the Federal Reserve and the Office of the Comptroller of the Currency (OCC) to oversee stablecoin issuers that hold $10 billion or more in assets. Smaller issuers would be under the purview of state regulators.
All issuers would be required to hold reserves in cash or US Treasurys, undergo regular audits, and publicly disclose their holdings and redemption processes.
Like money market funds, the tokens must aim to be redeemable at face value. But unlike money market funds, stablecoins under this bill cannot pay interest.
There’s an ongoing debate about how widespread the usage of these digital assets will ultimately be.
Stablecoin proponents tout these assets as a haven from crypto’s wild volatility and a safer place for traders to store their gains because they can be pegged to non-crypto assets like the dollar.
Their near-instant settlement and programmability also carry advantages proponents believe could enhance cross-border transactions and wider access to the US dollar.
But there are still concerns among detractors that there could be risks with stablecoins, including the possibility of panic runs among investors.
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