US Stablecoin Bill: On Track for Passage?
US Stablecoin Bill Inches Closer to Passage
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a key piece of legislation aiming to regulate dollar-pegged digital assets, is making significant progress in the US Senate. David Sacks, a senior advisor to President Trump on crypto and AI, expressed confidence in its passage, stating the administration expects bipartisan support.
"We have every expectation now that it’s going to pass," Sacks recently told CNBC following a crucial procedural vote where 15 Democrats joined Republicans to overcome the filibuster threshold.
Potential Economic Impact
Sacks projects the bill could stimulate trillions of dollars in demand for US Treasuries. He highlighted the $200 billion+ already circulating in unregulated stablecoins, arguing that legal clarity would create immediate, substantial demand for Treasuries.
Controversy and Concerns
The bill’s advancement occurs amidst controversy surrounding the Trump family’s crypto dealings and their ties to World Liberty Financial, a crypto firm that launched a stablecoin, USD1, backed by US Treasuries and dollar deposits. This has raised concerns about potential conflicts of interest, although Sacks declined to comment on the matter.
Further complicating the path to final passage, Senator Josh Hawley added a provision to cap credit card late fees, a move that could alienate financial industry allies.
Yield-Bearing Stablecoins and Bank Reaction
The rise of yield-bearing stablecoins is causing ripples in the traditional banking sector. New York University professor Austin Campbell noted that the banking industry is "panicking" over these assets, which threaten their profit models based on fractional reserve practices and low returns to depositors.
The market for yield-bearing stablecoins has significantly expanded, reaching $11 billion in circulation since January 2024, representing 4.5% of the total stablecoin market.
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