Is the GENIUS Act an answer to Stablecoin regulation in the US? All about first-of-its-kind cryptocurrency legislation
Here are ten things you need to know about GENIUS Act:
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The US Senate has advanced the GENIUS Act , a bill aimed at regulating stablecoins, following 66-32 vote on Monday, two weeks after Democrats blocked the measure. The Senate voted to move forward with legislation to regulate a form of cryptocurrency called stablecoins.This is seen as a significant step towards formal oversight of the digital asset space and the bill is aimed at regulating stablecoins, a type of cryptocurrency pegged to assets like the US dollar or gold.-The Senate advanced a major cryptocurrency regulation bill Monday on a bipartisan vote two weeks after every Senate Democrat united to block it. The procedural vote on the GENIUS Act — which would establish the first regulatory framework for issuers of stablecoins, digital tokens pegged to fiat currencies like the US dollar — was 66-32.-If enacted, the legislation would create the first federal framework for stablecoins—cryptocurrencies tied to assets such as the US dollar. Lawmakers argue that the bill strikes a balance between consumer protection and innovation, even amid political friction and ongoing concerns about transparency.-Stablecoins are a type of cryptocurrency designed to keep their value stable by being tied to traditional assets like the US dollar, gold, or government bonds. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins aim for price consistency, making them ideal for digital transactions, remittances, and decentralized finance (DeFi) platforms.-The market for stablecoins has surged, now approaching $250 billion. Still, critics caution that without clear regulations, these assets could threaten financial stability and consumer protection.-The bill is a legislative priority for President Donald Trump, who has ties to the cryptocurrency industry through ventures like World Liberty Financial and its stablecoin , USD1.-'Stablecoins are already playing an important role in the global economy, and it is essential that the U.S. enact legislation that protects consumers, while also enabling responsible innovations,' Sen. Kirsten Gillibrand, one of the initial Democratic cosponsors of the bill, said in a statement on Friday, according to CNN.-'The bipartisan GENIUS Act will provide regulatory clarity to this important industry, keep innovation on shore, add robust consumer protection, and reaffirm the dominance of the U.S. dollar,' Gillibrand continued.-Stablecoins are a fast-growing corner of the cryptocurrency industry that have produced enormous profits for some of the major players involved. A single stablecoin is worth $1, making them a much more reliable digital asset for commercial transactions than other forms of crypto.-The Trump family's crypto dealings with World Liberty Financial, and President Donald Trump's dinner for the top holders of his meme coin, have aggravated concerns among Democrats.-The GENIUS Act represents a pivotal moment in US crypto legislation. If passed, it would provide long-awaited regulatory clarity for stablecoin issuers and signal Washington's commitment to engaging with blockchain technologies.
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Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Campbell R. Harvey is Professor of Finance at the Fuqua School of Business, Duke University. Speaking to Srijana Mitra Das, he discusses the value of gold — through the ages:A. Part of my work looks at gold historically and why this is so valuable now. Gold has a very long track record which spans millennia. It's easy to work with because it's a soft metal. It doesn't tarnish — it keeps its lustre and it has artistic worth. Also, gold has held its value through time. I tell two stories about that — one is the cost of a loaf of bread in Nebuchadnezzar's time around 2,500 years ago. There is historical data on how many loaves you could buy for an ounce of gold then. If you convert that to today's prices, it's about $7 a loaf — that's what I pay at my artisanal bakery other story dates from Roman times almost 2,000 years ago in Emperor Augustus' reign. There is data on how much Roman centurions were paid in gold as well as the coins themselves to discern the gold's purity — what Roman centurions were paid in gold 2,000 years ago would cover the wage of an army captain in the US today. That means gold has held its value over the long term.A. Yes. In recent years, the first driver has been the financialisation of gold — physical gold is awkward to store. People who might have wanted it in their portfolio didn't want to take the risk of buying the actual metal. Exchange-Traded Funds (ETFs) were introduced in the United States in 2004 — that made it possible for the average investor to hold gold at 25 to 40 basis points a year, with the ETF provider taking care of storage. Institutional investors who didn't want to bother with warehousing bullion could do the same thing — hence, the price of gold increased. Previously, demand was unfulfilled because of institutional constraints — suddenly, those were broken and the price rose. Another force is what I call 'de-dollarisation' or the 'weaponisation' of the US dollar, particularly against Russia in terms of sanctions which have meant Russian entities being banned from the SWIFT system for transfer in US could do this, being the reserve currency of the world. I think certain countries — in particular, China — took note of that. The 'weaponisation' of the dollar spurred a move to be independent of it. Hence, the idea of 'de-dollarisation' with China taking actions consistent with that. One step towards doing this is to bolster the credibility of your own currency — to have gold in reserve does this and China's been a there is heightened uncertainty, given the potential for a trade war. In such times, people tend to increase their allocation to safe assets — gold is in that group. Another issue is a perception that the United States might not be the safe haven it was 10 or 20 years ago. When the US dollar suddenly becomes riskier and Moody's downgrades the US credit rating, some countries start thinking,'We need to diversify our reserve holdings and reduce dollar exposure.' So, you sell bonds — however, you need to replace them with something else. Gold is an option. This isn't just central banks — when uncertainty grows, institutional investors increase safe assets like consider supply and demand dynamics — gold's supply is very sticky, being a combination of mining and re-cycling. Mining supply doesn't move much. Even though gold's price has risen dramatically in recent years, actual mining supply has essentially stayed the same. It's hard to ramp up supply — opening a new mine takes years. Hence, gold prices are very sensitive to shifts in demand.A. Gold holds its value over the long term. I quoted two examples about that, one from 2,000 years ago and one from 2,500 years ago. Historically, gold has held its value over a very long horizon. That's not very relevant for most investors with a much shorter horizon though — and gold is an unreliable inflation hedge over shorter horizons. Its volatility is approximately the same as the S&P we look over the last 20 years, gold has more than held its value — it's actually gained in inflation-adjusted value. But if you look at the 20 years before that, gold underperformed inflation — it did not hold its value. The longer the horizon historically, the better gold is in terms of a hedge. However, gold's risk should also be measured by how it interacts with other assets in your portfolio. It turns out gold historically is uncorrelated with the stock makes it an attractive hedging property. In my research, I've looked at the last 11 major drawdowns in the S&P 500 — each had very large negative returns for the stock market. Gold, in 8 out of 11 situations, provided a positive return. In three, it was negative but that number was small. Gold could actually act to reduce a portfolio's risk — but, given its volatility, sometimes it'll work, sometimes, it won't, as the historical data shows expressed are personal
