- Lawmakers are working to create clear federal rules for stablecoins, with a major deadline approaching.
- The Senate passed the GENIUS Act, aiming to support dollar-backed stablecoins and prevent fraud.
- The House may amend the bill, with further debate possible over combining it with the CLARITY Act.
- Supporters say new rules could boost the U.S. dollar and financial system, but critics warn of risks and conflict of interest.
- Past issues with stablecoins involve untrue claims about reserves, highlighting concerns about transparency.
Congress is moving swiftly to set nationwide rules for stablecoins, a type of cryptocurrency linked to the U.S. dollar, as President Donald Trump has identified cryptocurrency regulation as a legislative priority. Lawmakers face an August deadline set by the administration for passing regulations, although Senate Banking Committee Chairman Tim Scott proposed extending it to September 30.
The Senate recently passed the GENIUS Act, which provides a rulebook for dollar-backed stablecoins and aims to prevent fraud by requiring full backing of each stablecoin by cash or short-term U.S. Treasury securities. According to Sen. Bill Hagerty, one of the bill’s sponsors, “The stablecoin legislation requires that each dollar stablecoin be backed fully by either a dollar in cash or short-term treasuries. To do that, the stablecoin issuer has to go and purchase short-term treasuries.” Supporters argue that this approach will strengthen demand for U.S. Treasury bills and help support the value of the dollar.
Vice President JD Vance called stablecoins “a force multiplier of our economic might,” while noting that passage of the GENIUS Act could benefit both the American economy and the dollar. However, the bill may change in the House. Rep. French Hill, chair of the House Financial Services Committee, has not said whether he will amend the Senate’s bill or combine it with elements of the CLARITY Act, which would clarify oversight of digital assets between the Securities and Exchange Commission and the Commodity Futures Trading Commission. However, House Republican leadership recently suggested they do not plan to merge the two bills. Speaker Mike Johnson stated he looks forward to separate consideration of the two bills as well as the Anti-CBDC Surveillance State Act.
The need for regulation became evident after issues with stablecoins like Tether, whose issuer and the Bitfinex exchange were fined $42.5 million by regulators for making misleading claims about their dollar reserves. These cases raised concerns about the reliability and transparency of stablecoin operators.
Despite bipartisan Senate support for the GENIUS Act, House passage is not guaranteed. Some Democrats, such as Rep. Jim Himes, have called for changes to prevent potential conflicts of interest, citing President Trump’s and his family’s investments in the cryptocurrency market as a concern. “If we can satisfy this question of conflict of interest—meaning, there’s a prohibition on the president being an issuer—a lot of us can get to ‘yes,’” Himes told reporters.
The bill also faces criticism in the Senate. Sen. Elizabeth Warren argued that it could weaken financial market stability, while Sen. Josh Hawley described the measure as a “huge giveaway to Big Tech,” warning that it would allow technology companies to operate stablecoins with few controls.
Stablecoins are digital tokens designed to keep their value steady by tying each coin to a traditional asset, like the U.S. dollar. Their popularity has highlighted the urgent need for clear and effective regulatory standards in the U.S.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Bitcoin Outflows Surge as Institutional Holders Signal New Bullish Base
- Intel Announces Major Layoffs in US, India; Shares Jump 7%
- Revolving Games CEO Accused of Reneging on $100K Refund Promise
- Amazon Extends Prime Day to Four Days; Sales Expected to Soar 53%
- Banque de France Warns on Risks, Benefits of Tokenized MMFs
