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Congress Passes GENIUS Act: Way to Being First Major U.S. Crypto Law

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2025-07-18 | 20m

The US House on Thursday passed major bipartisan legislation that aims to regulate a type of cryptocurrency known as stablecoins, sending the bill to the president’s desk for his signature.

After delays in Congress over Republican concerns with central bank digital currencies (CBDCs), the US House of Representatives has passed three pieces of crypto legislation.

In a Thursday House session, lawmakers voted 294-134 to pass the Digital Asset Market Clarity (CLARITY) Act, a bill aimed at establishing a market structure for cryptocurrencies, 308-122 in favor of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, and 219-210 for the Anti-CBDC Surveillance State Act.

Almost 80 Democrats voted yes for the CLARITY Act and more than 100 for the GENIUS Act, with the bills having been expected to move through the chamber before Congress breaks for its August recess.

US House Passes Three Key Crypto Bills

On the heels of its vote to pass its Clarity Act to oversee crypto markets, the House of Representatives followed up with a 308-122 approval of GENIUS.

The landmark legislative achievement for the crypto industry marks a sharp turnaround from recent years in which the sector languished under resistant U.S. regulators and a Congress unable to finish policy efforts. And it follows close behind another major House action to pass the Digital Asset Market Clarity Act (known as "CLARITY") — a bill that will establish a full set of rules over the wider crypto markets.

The GENIUS Act passed 308-122. Because it arrived as a Senate bill with a 68-30 approval in that chamber, all it needs now is a presidential signature before it becomes the law of the land. Regulators can then begin establishing regulations for the conduct of stablecoin issuers — a field currently dominated by Tether's USDT and Circle's USDC but which has drawn a high level of attention from traditional financial institutions, including Wall Street banks.

The legislative process again showed a large number of Democrats joining the Republican majority in favor of tailored regulations for the U.S. crypto industry. The Democrats in opposition argued the rules as proposed remained too dangerous for investors and potentially allowed for abuse by financial firms.

The Clarity Act remains the more important of the industry's two legislative goals for this Congress. The House's market structure bill passed with a 294-134 vote on Thursday. But the issue now gets taken up by the Senate, which is widely expected to go its own way and remains in the drafting process.

A third bill, the Anti-CBDC Surveillance Act, saw more partisan support, passing on party lines with just two Democrats in favor. This bill will be attached to the National Defense Authorization Act, as it's unlikely to win sufficient bipartisan support in the Senate on its own.

Earlier this year, when he invited crypto leaders to a summit at the White House, Trump had set a deadline before the August congressional break for finishing both of the industry's top legislative priorities. The stablecoin effort marks the first step, though market structure remains the more important legislation, and policy analysts have predicted the work could miss Trump's deadline considerably, potentially dragging later into the year.

The president's influence over crypto policy has been considerable — a point of contention for Democrats who say his personal stake in the industry is inappropriate. However, an 11th-hour negotiation with holdout Republicans on Tuesday's "Crypto Week" procedural actions ended with Trump boasting that he'd brought them back on board, only to find later that they'd continue their opposition for most of a day.

Industry Reaction is Overwhelmingly Positive

Many involved with crypto lauded the passage of the three bills as a “win” for the industry:

DANTE DISPARTE, CHIEF STRATEGY OFFICER, CIRCLE, NEW YORK:

"The House vote to clear the GENIUS Act for the President's signature is a defining moment for the future of money and the internet financial system. It signals strong bipartisan support for responsible innovation and sends a clear message that the U.S. will lead in the regulation of dollar-backed payment stablecoins. We commend Congressional leaders for delivering a regulatory foundation that puts consumer protection, financial integrity, and U.S. competitiveness at the forefront."

Though the anti-CBDC legislation, which received the least support from Democrats, could remain a contentious partisan issue.

Former Commodity Futures Trading Commission member and current Blockchain Association CEO Summer Mersinger said the vote on the Anti-CBDC Surveillance State Act suggested support for “privacy, market competition, and individual financial freedom.”

Prior to Thursday’s vote, California Representative Maxine Waters had been calling for all Democrats to oppose the three bills. In response to Republicans’ “crypto week” branding, Waters held an “anti-crypto corruption week” press conference and issued statements warning of corruption by the Trump administration.

“The Republican crypto bills we will consider will create giant loopholes in our federal financial laws that put consumers and investors at risk, in the name of innovation,” said Waters on Thursday. “These bills would increase the chance of another costly financial crisis, like the one in 2008 that led to trillions of dollars of wealth being wiped out, in the name of innovation.”

Trump reportedly planned to sign the GENIUS Act by Friday, assuming there were no amendments to the bill after it passed the Senate in June. Both the CLARITY and anti-CBDC bills will go to the Senate for debate and possible amendments before returning to the House or the president’s desk.

Political Brinkmanship: How CBDC Hardlines Nearly Derailed "Crypto Week"

The legislative package teetered near collapse on July 15th when 13 right-wing Republicans joined Democrats to defeat a procedural vote 196-222. Led by Rep. Marjorie Taylor Greene, rebels demanded explicit CBDC prohibition language within the GENIUS Act—calling Trump’s original executive order insufficient. This revolt paralyzed the House floor for hours until leadership brokered a compromise: attaching the CBDC ban to the must-pass National Defense Authorization Act (NDAA) instead. This tactical maneuver secured enough GOP votes to unfreeze the agenda but inflamed Democrats who decried the "cynical bundling" of crypto policy with defense spending.

Democratic opposition remained formidable throughout. Rep. Maxine Waters organized "Anti-Crypto Corruption Week" parallel events, accusing Republicans of enabling "loopholes that risk another 2008-style crisis". Her warnings echoed ABA concerns that the GENIUS Act lacks robust enforcement mechanisms against market manipulation. Nevertheless, pragmatic Democrats crossed party lines—notably 78 for CLARITY and 100+ for GENIUS—signaling growing recognition of crypto’s economic inevitability.

GENIUS Act Explained: Real Use Cases

Key Provisions of the GENIUS Act The GENIUS Act creates a comprehensive U.S. regulatory framework for “payment stablecoins”— digital assets that are designed to be used as a means of payment or settlement, are redeemable for a fixed amount of monetary value and that issuers represent will maintain a stable value relative to the value of a fixed amount of monetary value.

Permitted Stablecoin Issuers The GENIUS Act establishes a dual federal-state regulatory framework for stablecoin issuance. Under this structure, federally approved entities may issue stablecoins under direct federal supervision, while state-regulated entities may do so subject to compliance with baseline federal standards. This dual framework was designed to promote flexibility while maintaining uniform standards and safeguards. Under the GENIUS Act, the following types of entities will be permitted to issue payment stablecoins (after receiving approval from the relevant federal or state regulator):

- Subsidiaries of federally insured depository institutions (IDIs), which the GENIUS Act defines to include federally insured banks and credit unions;

- Uninsured national banks;

- Nonbank entities, subject to approval and oversight by the Office of the Comptroller of the Currency (OCC);

- Federal branches of foreign banks; and

- State-regulated entities (such entities must transfer to federal regulation if they have more than $10 billion in issued and outstanding payment stablecoins.)

Extraterritorial Application The GENIUS Act also has significant implications for foreign entities that issue stablecoins to persons located in the United States. The legislation authorizes U.S. regulators to exercise jurisdiction over such entities to ensure adherence to anti-money laundering (AML), sanctions, and consumer protection standards. Foreign stablecoin issuers may also be subject to federal registration, disclosure and compliance obligations if they engage in activities that impact U.S. markets or consumers. This framework will extend U.S. regulators’ reach beyond domestic borders, and foreign stablecoin issuers will need to reassess their operational models, compliance infrastructure and legal exposure when offering stablecoin products to U.S. residents.

Reserve Requirements The GENIUS Act imposes strict reserve requirements designed to ensure the safety and stability of payment stablecoins. Payment stablecoin issuers must maintain full, 1:1 backing of all outstanding stablecoins with permitted, liquid assets, which include U.S. dollars, demand deposits at IDIs, short-term U.S. Treasury obligations and balances held at the Federal Reserve. Issuers must hold these assets in segregated accounts, undergo regular third-party audits and provide monthly disclosures to verify reserve sufficiency. Consistent with the SEC’s earlier guidance on stablecoins, the GENIUS Act prohibits algorithmic stablecoins from being classified as “payments stablecoins,” even if backed by 1:1 reserves.

Compliance Obligations Under the GENIUS Act, all payment stablecoin issuers, whether federally or state-regulated, must comply with applicable Bank Secrecy Act requirements, including implementing AML and countering the financing of terrorism programs, and comply with Office of Foreign Assets Control sanctions requirements. The GENIUS Act also prohibits issuers from paying any interest or yield on stablecoins. Federal and state regulators will have the authority to conduct periodic examinations of payment stablecoin issuers and, in appropriate circumstances, bring enforcement actions to restrict unsafe or unlawful activity.

Consumer Reports key concerns with the GENIUS Act:

No Guarantee of Timely Redemption: The bill requires that issuers disclose redemption policies but does not ensure that consumers can redeem their stablecoins for dollars within a reasonable or enforceable timeframe—raising the risk of delayed access to funds in a crisis.
No Federal Insurance or Redress for Losses: The bill does not require reserve insurance or provide any federal backstop for consumers in the event of a platform failure or hack.
Limited Audit Transparency: Monthly self-reported attestations by executives are not a substitute for independent, third-party audits. Consumers have no reliable way to verify whether reserves exist or are secure.
Oversight Limited to OCC: The bill concentrates oversight power in the Office of the Comptroller of the Currency (OCC), without ensuring the Consumer Financial Protection Bureau (CFPB) or Federal Trade Commission (FTC) can enforce critical consumer protection laws.
No Prohibition on Big Tech or Commercial Issuers: The GENIUS Act leaves open the possibility for large technology companies or retailers to issue stablecoins without adequate banking regulation or privacy guardrails, raising risks related to market power, surveillance, and consumer choice.
Lack of Explicit Consumer Protections: The bill does not clearly apply the Electronic Fund Transfer Act, UDAAP provisions, or other core financial safeguards that protect consumers from fraud, error, or unauthorized transactions.

Conclusion:

This legislative triad crystallizes a pro-innovation U.S. crypto stance—but its implementation will define whether it enables responsible growth or replicates traditional finance’s exploitative patterns. While GENIUS may soon stabilize the $238B stablecoin sector and CLARITY could end the SEC’s "regulation by enforcement," their success hinges on closing enforcement gaps and ethical loopholes. As Blockchain Association CEO Summer Mersinger declared, the votes affirm "financial freedom".

Reference:

Pillsbury Law. (2025, July 17). Congress passes GENIUS Act: Landmark framework for payment stablecoins will reshape U.S. digital asset regulation. https://www.pillsburylaw.com/en/news-and-insights/congress-genius-act-framework-stablecoin-digital-asset-regulation-us.html

Reuters. (2025, July 17). Instant view: US House sends "Genius Act" stablecoin bill to Trump to sign. Marketscreener. https://www.marketscreener.com/news/instant-view-us-house-sends-genius-act-stablecoin-bill-to-trump-to-sign-ce7c5cd9d08ff627

CoinDesk. (2025, July 17). GENIUS Act for stablecoins passes House on way to be first major U.S. crypto law. https://www.coindesk.com/policy/2025/07/17/genius-act-for-stablecoins-passes-house-on-way-to-be-first-major-u-s-crypto-law

CoinCatch Team

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Disclaimer:

Digital asset prices carry high market risk and price volatility. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance. CoinCatch is not responsible for any losses that may occur. This article should not be considered financial advice.

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