WASHINGTON: U.S. President Donald Trump on Friday signed a law to create a regulatory regime for dollar-pegged cryptocurrencies known as stablecoins, a milestone that could pave the way for the digital assets to become an everyday way to make payments and move money.
The bill, dubbed the GENIUS Act, passed in the House of Representatives by a vote of 308 to 122, with support from nearly half the Democratic members and most Republicans. It had earlier been approved by the Senate.
The law is a huge win for crypto supporters, who have long lobbied for such a regulatory framework in a bid to gain greater legitimacy for an industry that began in 2009 as a digital Wild West famed for its innovation and speculative chaos.
“This signing is a massive validation of your hard work and pioneering spirit,“ said Trump at a signing event that included dozens of government officials, crypto executives and lawmakers. “It’s good for the dollar and it’s good for the country.”
Treasury Secretary Scott Bessent, in a statement, said the new technology would buttress the dollar's status as the global reserve currency, expand access to the dollar economy and boost demand for U.S. Treasuries, which back stablecoins.
Stablecoins are designed to maintain a constant value, usually a 1:1 U.S. dollar peg, and their use has exploded, notably by crypto traders moving funds between tokens. The industry hopes they will enter mainstream use for sending and receiving payments instantly.
The new law requires stablecoins to be backed by liquid assets - such as U.S. dollars and short-term Treasury bills - and for issuers to disclose publicly the composition of their reserves monthly.
Crypto companies and executives argue such legislation will enhance stablecoins' credibility and make banks, retailers and consumers more willing to use them to transfer funds instantly.
The stablecoin market, which crypto data provider CoinGecko said is valued at more than $260 billion, could grow to $2 trillion by 2028 under the new law, Standard Chartered bank estimated earlier this year.
The law's passage culminates a long lobbying effort by the industry, which donated more than $245 million in last year's elections to aid pro-crypto candidates including Trump, according to Federal Election Commission data.
The Republican president, who has launched his own coin, thanked executives for their support during the 2024 presidential campaign, saying, “I pledged that we would bring back American liberty and leadership and make the United States the crypto capital of the world, and that’s what we’ve done.”
Democrats and critics have said the law should have blocked big tech companies from issuing their own stablecoins, which could increase the clout of an already powerful sector, contained stronger anti-money laundering protections and prohibited foreign stablecoin issuers.
“By failing to close known loopholes and protect America’s digital dollar infrastructure, Congress has risked making the U.S. financial system a global haven for criminals and adversarial regimes to exploit,“ said Scott Greytak, deputy executive director of Transparency International U.S.
COULD BOOST DEMAND FOR T-BILLS
Big U.S. banks are internally debating an expansion into cryptocurrencies as regulators give stronger backing to digital assets, but banks' initial steps will focus on pilot programs, partnerships or limited crypto trading, Reuters reported in May.
Several crypto firms including Circle and Ripple are seeking banking licenses, which would cut costs by bypassing intermediary banks.
Backers of the bill have said it could potentially give rise to a new source of demand for short-term U.S. government debt, because stablecoin issuers will have to purchase more of the debt to back their assets.
Trump has sought to broadly overhaul U.S. cryptocurrency policies, signing an executive order in March establishing a strategic bitcoin reserve.
The president launched a meme coin called $TRUMP in January and partly owns crypto company World Liberty Financial. - Reuters
