On Thursday, a bipartisan bill on stablecoins was approved by the U.S. Senate Banking Committee, setting it up to reach a Senate vote in a matter of weeks. But critics contend that the legislation could open the door to “crypto abuse” and corporate overreach.
The GENIUS Act (otherwise known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act) aims to provide the country’s first federal regulations for stablecoins — digital assets pegged to stable assets like the U.S. dollar or gold. The stablecoin industry has grown into a $228 billion market.
“This is a huge step towards providing regulatory clarity for stablecoins, and a huge step towards upgrading and making the dollar more competitive,” said Jeremy Allaire, the CEO of Circle, the firm that issues the USDC stablecoin.
However, the bill has also drawn sharp criticism: “If the GENIUS Act becomes law, price manipulations, coin failures, and use of cryptocurrencies in illicit finance will increase,” said Bartlett Naylor, financial policy advocate for D.C.-based watchdog group Public Citizen.
Specifically, the group sounded the alarm about how the legislation would enable major corporations like Walmart, Meta, and X to penetrate the U.S. banking sector: “The committee should reject this ill-conceived, incomplete, and threatening legislation. The GENIUS Act invites major commercial firms such as Amazon, Walmart, Twitter/X, and/or Facebook/Meta to enter the banking sector because it lacks provisions under the Banking Holding Company Act that would prohibit non-financial firms from entering the banking business.”
Massachusetts Senator Elizabeth Warren echoed these concerns, recently warning the bill might “clear the decks for Elon to issue X Money as his own stablecoin, without any guardrails to protect consumers, national security, and financial stability.”
Supporters of the GENIUS Act, however, argue that it marks a turning point for the payments industry.
“It’s an important move for the payments sector, signaling that stablecoins are no longer just a niche experiment,” said Peter Marton, the former Deputy Superintendent of Virtual Currency at the New York Department of Financial Services. “They’re becoming a central element in global payments.”
“In the near future, we can expect every bank to adopt a stablecoin strategy, whether they’re prepared or not,” Marton said.
