Genius Act: What new crypto law could do, stablecoins explained

After political wrangling, three crypto bills favored by Donald Trump have received key approvals on Capitol Hill, with one signed by the president into law.

After some political wrangling, three crypto bills favored by President Donald Trump received key support on Capitol Hill this week, with one of them signed into law on Friday afternoon. Flush with enthusiasm amid the bills’ imminent passage, investors have lifted the three major crypto tokens — bitcoin, ether and ripple — to all-time highs. Bitcoin is now the best-performing major asset in the world this year, having climbed nearly 30%, outpacing gold and the tech-heavy Nasdaq Composite stock index.

The effects of the bills are not immediate, but they will fuel crypto’s evolution from a niche, fringe corner of the economy into the mainstream — for better or much, much worse — depending on whom you ask.

The bill signed into law Friday, and the one that could usher in the most significant changes, is the GENIUS Act. It paves the way for private firms to issue what are known as stablecoins, which are privately issued digital money — think Toys R’US’ “Geoffreybucks” for the 21st century. (The “stable” part of stablecoin comes from the idea that the tokens’ value would always be equivalent to $1.)

While some firms have already been issuing stablecoins, they’d been operating in a legal gray zone. The GENIUS Act lays out specific requirements for companies who issue stablecoins, like complying with anti-money laundering laws and monitoring and reporting suspicious activity. In the eyes of many consumer protection advocates, the requirements are grossly inadequate.

“The reason you would never recommend grandmother use a stablecoin is she would have to give away a dollar that’s protected by the federal government and deposit insurance, and which comes with a ton of consumer protections, and which pays interest in her banking account, in exchange for a stablecoin that doesn’t have any of those things,” said Corey Frayer, director of Investor Protection for the Consumer Federation of America.