On Thursday, the U.S. Senate rejected the GENIUS Act, marking a significant setback for stablecoin regulation. The bill's failure came after a bloc of Democratic senators withdrew their support.
Rejection of the GENIUS Act
The GENIUS Act, which aimed to establish federal oversight for stablecoins, fell short of the required 60 votes. This setback represents a major blow to former President Donald Trump’s efforts to integrate crypto policy into his agenda. The bill was the product of months of negotiations but was only backed by five Democratic senators.
Responses from Authorities
The White House expressed frustration with the vote's outcome. Treasury Secretary Scott Bessent referred to it as a 'missed opportunity' to formalize rules for stablecoins, which are digital tokens pegged to assets like the U.S. dollar. Bessent also argued that the legislation could have reinforced the dollar’s global position.
Future of Stablecoin Regulation
While the GENIUS Act did not ban stablecoins, they remain legal under current U.S. law. However, the lack of federal guidelines leaves companies and users operating under fragmented state-level frameworks. Critics warn this could expose consumers to unchecked risks, while proponents of decentralized finance argue that excessive regulation may stifle market activity.
The rejection of the GENIUS Act highlights existing political divides around cryptocurrency and stablecoins. Despite the current uncertainty, discussions may resume in the future.
