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As the groundbreaking US stablecoins bill passes the Senate and moves closer to becoming law, industry insiders are preparing for the next chapter in the evolution of the crypto sector.
The relationship between US lawmakers and regulators and the crypto industry is changing rapidly under the Trump administration, which has been supportive of the growth of digital assets and their integration into the economy.
Things have warmed up significantly since persistent enforcement actions and consumer protection concerns saw the industry depicted as lawless and fundamentally risky during the Biden era.
Efforts to build a better relationship with the Republican Party have seen crypto become viewed more favourably, and bipartisan legislation looks more likely than ever.
As covered by Vixio, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is sponsored by Tennessee Senator Bill Hagerty and co-sponsored by Senator Cynthia Lummis, a fellow Republican, as well as Democrat Senators Kirsten Gillibrand and Angela Alsobrooks.
It establishes a first-of-its-kind regulatory framework for payment stablecoins, with the intention of ensuring greater consumer protection while addressing national security issues.
Co-sponsor Gillibrand called it a “landmark moment in the bipartisan effort to regulate stablecoins”, adding that it will enable businesses and consumers to take advantage of the “next generation of financial innovation”.
Industry acclaim
Industry stakeholders have praised the GENIUS Act as a step forward for digital finance in the US, highlighting its potential to bring vital clarity to the space.
Bobby Shell, VP of marketing at stablecoin provider Voltage, told Vixio that the fact that the act outlines clear rules for stablecoin issuers, including transparent reserves and regular audits, should help to increase both institutions’ and users’ trust in the instrument.
“That kind of clarity is key for growth, because many companies have been hesitant to move without it,” he said.
“The Act is mostly industry-friendly, but the real test will be how it’s applied in practice.”
Jeff Le, managing director at policy consultancy 100 Mile Strategies, described the GENIUS Act's passing the Senate as a landmark moment for the crypto sector.
“Just three years ago, the industry was going through its winter. Now it has advanced bipartisan legislation for a dollar-pegged stablecoin framework.”
This is a view shared by Charles Wayn, co-founder of web3 growth platform Galxe, who said, “GENIUS is one of the most significant pieces of digital asset legislation to date to have bipartisan support, although there remain some unresolved concerns for some parties that may take some time to be fully resolved”.
The regulatory framework the GENIUS Act puts in place will play a significant role in legitimising stablecoins for traditional financial institutions that have previously been wary of engaging with crypto.
Jesse Shrader, CEO and co-founder at data provider Amboss, said the act is “the stamp needed for broader adoption of efficient payment tech by the most conservative financial institutions.”
He expects the legislation to lead to increased integration of stablecoins in banks and fintechs, which will in turn bring greater transaction volumes.
“The market's choice of stablecoins will be based on regular audits, trade volume, and speed," he said.
“The GENIUS Act includes compliance requirements, especially AML, which companies can prepare for using Blockchain-based tools or Lightning-specific tooling for higher scale activity.”
Impact on firms
Given the momentum gathering around the legislation, firms should be preparing to comply with the requirements of the GENIUS Act.
Lilya Tessler, lead for Sidley Austin’s FinTech and Blockchain group, outlined the necessary steps: “Stablecoin issuers will likely need to modify their operations to comply with the new regulatory requirements of the GENIUS Act. Intermediaries, including exchanges and custodians, will also need to revisit their policies and procedures to ensure, at a minimum, they can adequately track the status of stablecoins and their issuers to prevent transacting in unregulated and unlawful stablecoins.”
Once the regulatory framework for stablecoins is established, their adoption will likely increase, which should bring down the cost for consumers and businesses, and increase transaction speeds.
“Stablecoin issuers and service providers will need to comply with the requirements of whatever framework is ultimately adopted – whether that is the GENIUS Act or another piece of legislation or rulemaking”, Tessler added.
Although the precise terms of the act are subject to change, given that it must still make its way through the House, firms can expect enhanced focus on accounting and auditing, as well as operational requirements related to both stablecoins and stablecoin reserves.
Tessler told Vixio that businesses should “develop the compliance and technological capabilities necessary to capitalize on growing stablecoin adoption. For example, stablecoin legislation is anticipated to drive more use of stablecoins for payments in securities markets and everyday consumer purchases.”
Voltage’s Shell agrees: “Companies should start aligning with the new rules now, strengthening compliance systems and getting ahead of reporting requirements.”
The stablecoin opportunity is significant – even before the regulatory framework has been implemented, stablecoins already have a combined market cap of more than $250bn worldwide, according to CoinDesk data.
Traditional financial players are now set to pour into the space, in a powerful example of regulation’s ability to make a sector attractive to a wider range of market participants.
“Ultimately, the GENIUS Act creates the regulatory clarity needed to unlock true mainstream adoption of cryptocurrencies”, said Galxe’s Wayn.
“With clearer guardrails in place, we can expect greater appetite from mainstream financial institutions, fintechs, and payment platforms to integrate stablecoins, driving both retail and institutional participation in dollar-based digital assets.”
