U.S. House Passes GENIUS Act for Stablecoin Regulation

TLDR

• The GENIUS Act passed with a 308-112 bipartisan vote.
• Stablecoins must be backed 1:1 by verifiable reserves.
• Paul Atkins emphasizes regulatory clarity for crypto markets.

The U.S. House of Representatives has formally passed the GENIUS Act, a critical piece of legislation for the regulation of payment stablecoins. The bill, supported by both parties with a 308-112 vote, now moves to President Trump’s desk for his signature. He has pledged to sign the bill, marking a significant step forward in the regulation of digital assets in the United States.

Paul Atkins, Chairman of the Securities and Exchange Commission (SEC), praised the passage of the Act. Atkins is known for his long-term commitment to providing clear regulations for cryptocurrency markets. He emphasized that the Act supplies much-needed regulatory clarity for crypto industry participants.

Key Figures in the GENIUS Act Passage

Several members of Congress were instrumental in the passage of the GENIUS Act. Bill Hagerty (R-TN), Kirsten Gillibrand (D-NY), Cynthia Lummis, Tim Scott, and French Hill were central figures in drafting and guiding the bill through the House.

House Speaker Mike Johnson played a crucial role in managing party negotiations, ensuring the Act was brought to the floor for a vote. This collaborative effort across party lines highlights the significant bipartisan support for this legislation.

Atkins’ Vision for Crypto Regulation

Paul Atkins has called the GENIUS Act a “historic milestone,” not just for crypto entrepreneurs but also for financial market participants and every American. In his statement, he emphasized the potential of blockchain technologies to transform America’s financial infrastructure.

“The passage of the GENIUS Act marks a historic milestone for crypto entrepreneurs, financial market participants, and everyday Americans. Blockchain and crypto asset technologies have the potential to revolutionize America’s financial infrastructure.”

Paul Atkins, SEC Chairman

Atkins also reiterated the SEC’s move from a regulation-by-enforcement approach to a reliance on notice-and-comment rulemaking. This adjustment aims to provide industry players with more predictable guidelines.

Institutional Impacts and Market Expectations

The GENIUS Act mandates that all stablecoins be backed 1:1 by verifiable reserves. Although the Act does not directly specify funding allocations, it is expected to increase institutional interest and require greater compliance efforts.

Analysts predict that the regulatory clarity provided by this Act will attract more institutional capital to the stablecoin market and DeFi platforms, potentially creating new investment opportunities.

Broader Impact on Crypto Assets

Primarily, the GENIUS Act targets payment stablecoins, such as USDT and USDC. However, the regulation is also expected to impact other digital assets and networks involving stablecoins. Ethereum and other blockchains supporting DeFi protocols could experience secondary effects.

Bitcoin may see indirect impacts as a major asset used for collateral and trading, given the anticipated increase in stablecoin adoption. Real-time impacts on liquidity, TVL, and staking are yet to be disclosed.

Understanding Regulatory Formalization Challenges

Historical data, including precedents like the OCC’s stablecoin guidance in 2020, suggests that similar regulatory clarifications often yield increased inflows into compliant assets. The GENIUS Act is poised to echo this pattern by providing a stable regulatory environment.

This Act aims to spur innovation by establishing “clear rules of the road” for the crypto industry, a sentiment echoed in official communications and testimony from industry leaders.