There it is, folks: Stablecoins are officially a thing – almost. The U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act for short) this past Tuesday, voting 68-30 to establish federal regulatory guidelines for this specific form of cryptocurrency. From every mountainside, let Tether and USD Coin ring.
The House of Representatives still has to pass its own take on the GENIUS Act, which opens up all sorts of room for shenanigans, and President Trump still has to sign off, but that’s a slam-dunk with virtually no one stepping into the lane to take the charge. And once this legal framework is in place, you’ll see everyone from banks to Walmart issuing their own stablecoins.
The thing is, if you’ve been paying attention to the crypto news, you’ll know the GENIUS Act isn’t the first big step toward integrating these digital coins – and it won’t be the last. Here’s what the crypto betting and investing worlds can expect going forward.
What Happens Next?
The people who want to issue stablecoins have to get all their ducks in a row. The biggest requirement, at least on the surface, is that each coin has to be backed 1:1 by “safe assets” like cash and U.S. Treasury bills. The issuers also have to follow rules to combat money laundering, and there’s extra paperwork to do if their market cap exceeds $50 billion.
Which means we’re very likely to see a rush toward purchasing said Treasuries. Last month, not long after we told you about the GENIUS Act moving forward to the Senate floor for debate, Bank of America analysts said the following:
“For each $1 that leaves traditional banks in favor of stablecoins, there will be a $0.90 incremental demand for USTs.”
T-bills are already short-term securities – maturing in one year or less – but the emphasis here will be on the shorter end; Bank of America specifically mentioned three-month terms in their missive. The whole point is that these reserves have to be quickly and easily convertible into cash, lest the stablecoin issuer go bankrupt or otherwise fail.
Don’t We Already Have Stablecoins?
Of course. Tether (USDT) is the third-largest digital coin by market cap behind Bitcoin and Ethereum, and they already held somewhere around $100 billion of T-bills in reserve as of March. Then you have USD Coin (USDC) checking in at No. 7 according to CoinMarketCap. Roughly 75% of their $ 43.4 billion in reserve (specifically, the Circle Reserve Fund) is said to be in T-bills.
Like the song says, one thing leads to another: Shares of Circle Internet Group (CRCL), the issuer of USDC, shot up 20% to around $180 in the past four hours before we went to press. They were trading at $31 when Circle went public on June 4. The rich get richer.
Trump and the Political Crossfire
Speaking of which, Donald Trump. The POTUS and his family’s World Liberty Financial firm are making money hand over fist with their own stablecoin, USD1; the conflict of interest here is obvious enough that libertarian-leaning Senate Republicans Rand Paul of Kentucky and Josh Hawley of Missouri joined Elizabeth Warren (D-Mass.) and other Democrats in voting against it.
Warren has been the most vocal critic of the GENIUS Act among senators. Her opposition helped force lawmakers to amend this legislation to include more consumer protection and more stringent ethical standards for government employees, thus convincing enough Democrats to relent and allow its passage.
Not included in the final Senate bill: an amendment preventing Trump and his family from cashing in. The GENIUS Act does include language to “prohibit any member of Congress or senior executive branch official from issuing a payment stablecoin product during their time in public service,” but that’s as far as it goes. Bet and invest accordingly.
