After weeks of tense debate and political maneuvering, Donald Trump's $4.5 trillion tax and spending package, known as the "Big Beautiful Bill," has passed both houses of Congress. The bill was passed by the Senate on July 1 with a narrow vote of 51-50 and was passed by the House on July 3 with a close vote of 218-214. The bill is now headed to President Trump's desk for signing, expected later today, July 4.
What's in the Big Beautiful Bill? The GENIUS Act
The bill holds key elements in Trump's second-term agenda. It permanently extends most of the 2017 Tax Cuts and Jobs Act, increases funding for border security, defense, and energy production, and implements significant cuts to Medicaid and nutrition programs like SNAP. The Congressional Budget Office estimates the bill will add about $3.4 trillion to the federal deficit over the next decade, although Republicans contest these predictions.
A notable provision is the GENIUS Act – "Guiding and Establishing National Innovation for the U.S. Stablecoin." The stablecoin provision creates the first federal regulatory framework for stablecoins, requiring:
- 1:1 reserves backed by dollars, treasury bonds, or similar high-quality assets,
- regular public disclosure and annual audits,
- strict compliance with AML/KYC and oversight divided between federal and state regulators.
Essentially, the GENIUS Act aims to protect the dollar's dominance, provide regulatory clarity for digital finance, and facilitate faster and cheaper payments.
"When the GENIUS Act becomes law, businesses of all sizes and American citizens across the country will be able to make payments almost instantly, instead of having to wait days or sometimes even weeks. Simply put, stablecoin is a game-changing development that could bring our payment system into the 21st century," said Republican Senator Bill Hagerty of Tennessee, the principal sponsor and co-author of the GENIUS Act.
Bitcoin Outlook – Analyst Perspectives and Possible Scenarios
Market experts are divided on the bill's impact on cryptocurrency. The GENIUS Act is seen as reinforcing legal frameworks that strengthen trust in the U.S. dollar and traditional financial systems. By imposing stricter rules on stablecoins, the bill may reduce volatility in the cryptocurrency market and systemic risks related to unbacked digital assets. However, some argue that this legislation undermines stablecoin issuers, making them uncompetitive with "legacy system products."
But there are many other factors at play. With the Big Beautiful Bill now law, the cryptocurrency market faces a complex mix of potential outcomes. Below is a general overview of what could happen.
Bitcoin as an Inflation Hedge
The significant addition of this bill to the national deficit raises concerns about prolonged inflation, which could drive demand for Bitcoin as a "digital gold" hedge against fiat currency devaluation.
Mixed Short-Term Market Reactions
Despite financial stimulus measures, historical data shows that increases in the U.S. debt ceiling do not consistently lead to rising Bitcoin prices. Cointelegraph emphasizes that Bitcoin prices remain stable after previous debt ceiling increases, suggesting the market may have already priced in these developments.
No tax incentives to drive cryptocurrency adoption
Unfortunately, the Big Beautiful Bill passed without any cryptocurrency tax breaks or comprehensive cryptocurrency tax reform, despite strong lobbying efforts and proposals like Senator Cynthia Lummis's cryptocurrency tax amendment. This leaves cryptocurrency users continuing to face tax complexity and uncertainty.
Risks from Rising Interest Rates
Expanding deficits could push interest rates higher, making riskier assets like cryptocurrencies less attractive. This move could dampen long-term cryptocurrency market enthusiasm despite initial gains.
Regulatory Outlook
Although the bill does not directly regulate cryptocurrency, upcoming sessions of Congress (Crypto Week starting July 14) will consider related legislation such as the GENIUS Act, which could further shape the regulatory environment.
In summary, the cryptocurrency market may see a short-term boost from tax incentives and inflation concerns but faces headwinds from financial worries and potential regulatory tightening. The changing policy landscape will be crucial to monitor in the coming months.