The Senate voted 66-22 late Monday to advance the GENIUS Act, a bill that aims to regulate some cryptocurrencies.
The bill faced some Democratic opposition in recent weeks over President Donald Trump’s cryptocurrency ventures, but it ultimately garnered support from 16 Democrats, including Sen. Cory Booker, D-N.J., and Sen. Adam Schiff, D-Calif.
The industry-backed measure establishes rules targeting stablecoins, a type of cryptocurrency pegged to the value of another asset, often the U.S. dollar.
Proponents hailed the bill as a means of protecting consumers and setting industry standards, which could allow such crypto coins to become a mainstream tool for digital payments and other financial instruments.
Critics warned, however, that the bill fails to address conflict-of-interest concerns exemplified by Trump, and it risks endangering consumers and the wider economy with a weak set of rules.
“This sets the stage for these assets to go mainstream,” Christian Catalini, founder of the MIT Cryptoeconomics Lab, who supports the measure, told ABC News in a statement.
Here’s what to know about the GENIUS Act, and what it means for you.
What is the GENIUS Act?
The GENIUS Act concerns the issuance and exchange of stablecoins, a form of digital currency backed by another form of currency like the U.S. dollar or a commodity like gold.
Stablecoins are designed to be less volatile than other forms of cryptocurrency, which can experience large price swings and, in turn, pose difficulty for individuals using them to facilitate a purchase or sale.
The bill sets rules for stablecoin issuers, including a mandate that firms hold a reserve of assets underlying the cryptocurrency. That stipulation aims to protect consumers, who otherwise risk a failure to cash out their holdings in the event of a rapid, widespread offloading of coins.
In a separate effort to safeguard consumers, the measure would require issuers to grant coin holders priority for repayment in the event of a bankruptcy. The measure also mandates issuers abide by some anti-money laundering rules and anti-terrorism sanctions.
What do supporters and critics say about the GENIUS Act?
Supporters of the GENIUS Act applaud the measure as a first-of-its-kind effort to formalize a key segment of the cryptocurrency industry, offering safeguards for consumers, allowing entry for conventional financial firms and growing the digital currency market.
“This opens the floodgates,” Catalini said. “You’ll see entry by many issuers. Consumers will all have more choices. This will bring more competition and innovation in payments.”
The new rules, Catalini added, take the onus off of consumers to discern between good and bad actors within the stablecoin sector, instead opening up competition between firms based on the quality of their products.
“It becomes a game of who can deliver better use-cases and features to consumers and businesses the fastest,” Catalini said.
Critics of the measure, however, say it amounts to an industry-friendly set of weak regulations that fail to adequately protect consumers and police illicit trading of stablecoins.
“While a strong stablecoin bill is the best possible outcome, this weak bill is worse than no bill at all,” Sen. Elizabeth Warren, D-Mass., said on the Senate floor Monday.
Critics say the shortcomings of the bill are exemplified by its inability to address conflict-of-interest concerns raised by Trump’s dealings in stablecoins.
In March, Trump-backed crypto firm World Liberty Financial issued a stablecoin USD1. An Abu Dahbi-based investment firm earlier this month used the stablecoin to make a $2 billion investment in crypto exchange Binance, putting Trump’s company in a position to profit from the deal. Trump has denied any wrongdoing.
The bill features a stipulation that would “prohibit any member of Congress or senior executive branch official from issuing a payment stablecoin product during their time in public service.”
Still, Warren said, the measure inadequately protects against concerns raised by Trump’s venture.
“This bill provides even more opportunities to reward buyers of Trump’s coins with favors like tariff exemptions, pardons, and government appointments,” Warren added.
The post What to know about the GENIUS Act, a crypto regulation bill appeared first on ABC News.
