What would happen if the U.S. Congress approved the Genius Act?
Here’s an overview of what might happen if the U.S. Congress passes the 'GENIUS Act' to regulate stablecoins.
✅ What is the GENIUS Act?
Name of the law: Guiding and Establishing National Innovation for U.S. Stablecoins Act.
Aims to regulate stablecoins like USDC and USDT and tie them to a fixed reserve mechanism (dollar or short-term bonds) at a 1:1 ratio.
Requires issuers to provide monthly disclosures of reserves and annual audits if the currency value exceeds $50 billion.
🏦 Potential Implications:
1. Boosting trust and broad adoption
By providing regulatory clarity, the stablecoin market is likely to grow to $2–3 trillion over the next decade.
The influx of founders like banks, major traders like Visa and Mastercard, and Amazon may increase.
2. Consumer protection and financial security
Priority for currency holders in case of the issuer's bankruptcy.
Prohibits claims that it is guaranteed by the government or by insurance institutions like the FDIC.
Strict requirements against money laundering and restrictions on transactions with startups.
3. Increased activity in the U.S. bond market
Due to the mandatory holding of treasury bonds, the demand for short-term treasury bonds may rise.
This may affect the financial market and the profitability stability of the government.
4. Balance between governance and political concerns
Members of Congress and executive staff are prohibited from issuing or owning these currencies; however, it is reported that this ban does not include the office of the President or Vice President.
Massachusetts Senator Elizabeth Warren raised concerns about the exclusion of Trump's spouse from the ban.
Criticism: 'A highway to corruption under Trump.'
⚖️ Pros and Cons:
Benefits Challenges
Regulatory clarity that reinforces trust Risks to the bond market
Investor protection Concerns related to conflicts of interest
Support for financial and tech institutions Higher compliance costs for issuers
📌 Next step
The GENIUS Act was passed by the Senate with 68 votes to 30, and the bill is now in the House of Representatives before being signed by President Trump.
If it passes the council and is expected to be signed, we will witness a historical shift in U.S. digital currency legislation, especially stablecoins.
🧭 Summary
If Congress passes the law and the President approves it:
A broad range of regulation and legal visibility will be achieved.
Encourages the expansion of stablecoins with confidence.
Enhances the United States' position in 'digital leadership.'
But it may open discussions about political powers and its impact on the bond market.