The Senate’s decision to push forward landmark legislation on the regulation of “stablecoins”—cryptocurrencies whose value is pegged to another asset—could hold significant implications for the investors’ portfolios and the wider crypto market, experts have told Newsweek.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act passed the cloture vote by a margin 66 to 32 on Monday, with two abstentions. The bill has now secured the 60 needed to advance to a full Senate vote in the near future.
Vanderbilt Law School Professor Yesha Yadav said that, should the bill pass a full Senate vote, it will “represent a watershed in the history of crypto markets and their acceptance within the mainstream financial system.”
What is the GENIUS Act?
The bill is an attempt to regulate the fast-growing market for stablecoins by providing clear guidelines for issuance and transparency, as well as reserve obligations.
With its passage, GENIUS would require stablecoin issuers to maintain a 1-to-1 reserve of liquid assets, such as cash, to back their tokens, a measure designed to ensure holders can redeem coins at any time. Regarding consumer protections, it states that in the event of an issuer going bankrupt, stablecoin holders would be given priority over creditors, and that issuers are required to abide by conventional anti-money laundering regulations.
British economist Garrick Hileman, known for his research into cryptocurrency and blockchain technology, told Newsweek that GENIUS would “end the regulatory ‘maybe’ and replace it with a simple deal—keep one real dollar for every digital dollar, publish audits, or get out.”
The bill would also allow banks to issue their own stablecoins, and nonbank entities to do so provided they register and meet certain regulatory benchmarks.
“This piece of legislation will have instant impact on the financial system and in particular on the capacity of major financial institutions like banks to open up the possibility of issuing stablecoins, as well as offering a range of other services connected to them,” said Yadav. “This represents a sea change from past practice where banks were severely curtailed in their ability to engage with the crypto economy as well as crypto products.”
What Are the Concerns Over the Crypto Act?
The bill has been framed by its supporters as providing clear and necessary federal guidelines that will accelerate U.S. innovation in the crypto space. Criticism of the act, expressed by several Democrats and a select few Republicans, has focused on the bill’s insufficient safeguards against corruption, and concerns that allowing “Big Tech” to issue stablecoins would erode “America’s historical separation between banking and commerce.”
These concerns had resulted in weeks of debate over the bill, as Democrats argued for additional amendments on consumer protections and ethical standards for public officials, which delayed the procedural vote until Monday.
Some, most notably Massachusetts Senator Elizabeth Warren, have warned that by bringing stablecoins into the mainstream, public officials engaged in cryptocurrency ventures may be able to reap even greater profits, despite being the ones tasked with regulating the market.
Warren cited President Donald Trump’s affiliation with the crypto firm World Liberty Financial and its recently issued stablecoin, USD1, as an example of such a conflict of interest.
“The GENIUS Act will accelerate Trump’s corruption by supercharging the size of the stablecoin market and the reach and profitability [of] Trump’s USD1,” Warren said on the Senate floor ahead of the vote. “This bill provides even more opportunities to reward buyers of Trump’s coins with favors like tariff exemptions, pardons, and government appointments,” she added.
Newsweek reached out to the White House for comment, as well as the president’s affiliated companies, World Liberty Financial and the Trump Organization.
“The growing ethics concerns are real and there is a serious need for timely investigations and action,” said Hileman. “But ethics concerns belong in the ethics domain, not a payments efficiency bill.”
“GENIUS drops every issuer straight under the Bank Secrecy Act—same [Anti-Money Laundering] tool kit the banks use,” he added. “That’s tighter oversight, not a free pass.”
Financial analyst Lyn Alden told Newsweek that she was less concerned about the strength of bill’s anti-money laundering provisions than the issues surrounding potential conflicts of interests expressed by Warren.
“I think the concerns around conflicts of interest are reasonably valid, although that’s a broad theme in this administration, rather than a crypto-specific thing,” she said. “It would be comparable to passing legislation that benefits real-estate owners for a president who has considerable real-estate interests.”
What Will the Act Do for Crypto Investments?
Experts agree that the passage of GENIUS will provide some short-term tailwinds for cryptocurrency, as its advancement in the Senate represents the first step toward legitimate financial regulation and a politically backed entry into the mainstream asset market.
“This represents the first piece of major crypto legislation that has been passed by Congress, and as a result, it signals the clear entry of crypto into the bloodstream of the larger U.S. economy,” said Yadav. She added that the bill’s passage was “a win (and huge sigh of relief) for the crypto/stablecoin industry.”
While stablecoins represent their own class of asset—their value tied to fiat currencies like the dollar—Yadav said that the benefits of the bill could extend to staple cryptocurrencies such as Bitcoin and Ether.
“Markets love certainty; Bitcoin and Ether popped right after the 66‑32 cloture vote,” said Hileman. “GENIUS advancing helps remove some of the regulatory discount on crypto.”
Both Bitcoin and Ethereum saw increases directly after Monday evening’s vote, though this was followed by a stabilization on Tuesday. Bitcoin is up over 20 percent in the past month, and 40 percent since Trump’s announcement of a pause on “reciprocal” tariffs on April 9. It was trading at around $106,250 as of 6:30 a.m. ET.
Even if the bill fails to “magically print new value,” Hileman added that the passage of GENIUS will inject some bullishness into the market.
“Any steps that the government takes to further legitimize or integrate the cryptocurrency industry tend to be good for prices of major assets, all else being equal,” Lyn Alden told Newsweek.
However, she added that the GENIUS Act will not have as profound an impact on crypto prices as other policy changes, such as the Securities and Exchange Commission’s early 2024 decision to approve trading for certain spot Bitcoin exchange-traded products—financial instruments allowing investors to gain exposure to the cryptocurrency’s price without themselves owning Bitcoin.
“So, to the extent that we do have a strong period of price appreciation ahead, I would not strongly attribute it to the GENIUS Act per se,” she said.
What Happens Next?
Following the successful cloture vote, which prevents filibustering and limits debate to 30 hours, GENIUS now advances to a full Senate vote. This could take place as early as Wednesday, one Senate source told the cryptocurrency-focused outlet Decrypt.
Having reclaimed its $100,000 valuation earlier this month, Bitcoin bulls believe the asset can reach even greater heights in 2025, spurred by increased legitimacy and institutional investment. Ryan Lee, an analyst at Bitget Research, projects Bitcoin reaching as high $180,000 by the end of the year.
Read the full article here
