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CNBC
2 days ago
- Business
- CNBC
The Senate just advanced a bill to regulate stablecoins—what the GENIUS Act could mean for crypto and other investors
The U.S. Senate voted on Wednesday to advance the Guiding and Establishing National Innovation for U.S. Stablecoins, known as the GENIUS Act, setting it up for a final floor vote in the coming days. The legislation aims to regulate the roughly $238 billion stablecoin market, per CoinDesk data, creating a clearer framework for banks, companies and other entities to issue the digital currencies. The bill has bipartisan support, as well as criticism from both parties, making its fate in the Senate uncertain. Here's what to know about what's included in the bill and how it could impact investors — even those who don't hold crypto. A stablecoin is a type of cryptocurrency that is pegged to another asset, typically the U.S. dollar, which makes it less volatile than other cryptocurrencies tend to be. The currency is used in a number of ways, including for payments and futures trading. Since they're also more predictable than regular crypto tokens, traders also use stablecoins "to sit out times of volatility or market downturns," says Nic Puckrin, a crypto analyst, investor and founder of The Coin Bureau. "Stablecoins are also being used increasingly in emerging markets, like Latin America and Sub-Saharan Africa, to hedge against monetary instability, as well as for cheap cross-border payments," he adds. "The use cases are very broad, and new ones are emerging all the time." Ultimately, the GENIUS Act could make stablecoins more mainstream by bolstering trust in the currency and encouraging more competition in the market, Puckrin says. "Right now, [the stablecoin market] is, for all intents and purposes, a duopoly. The market is nearly entirely dominated by Circle's USDC and Tether's USDT," Puckrin says. Since the bill will create a clear pathway for banks and other entities to begin issuing stablecoins, "we'll likely see a flood of them rush into the market at the start," he says. Big banks are gearing up to create their own coins. And while they may not all be successful, Puckrin says they will give consumers more options to find a stablecoin and issuer that works best for their needs. Proponents say it will help safeguard investors and regulate the stablecoin market by ensuring issuers have the reserves needed to give stablecoins their value. "If we fail to act now, not only will these benefits slip away — we will also fall behind in global competitiveness," Sen. Bill Hagerty (R-Tenn.), who introduced the bill, said in the Senate on Wednesday. "Without a regulatory framework, stablecoin innovation will proliferate overseas — not in America!" Puckrin agrees stablecoin regulation could be a boon for the U.S. and its position in the global economy. "Congress has also realized that instead of threatening the U.S. dollar, stablecoins can help cement its global dominance, because 99% of stablecoins are pegged to USD," he says. "With the dollar struggling to maintain its role in the global economy, the GENIUS Act could just be the thing that saves it." Some supporters acknowledge the bill isn't perfect, but think it's better than not having regulation on stablecoins at all. "The general outlook is that [the bill] will do better than anything that is currently happening," says Bezalel Eithan Raviv, CEO of blockchain security firm Lionsgate. "It's a step in the right direction for everyone. There are ways to make it better. There are ways to make everything better. But this is the first one. Let's give it a try, and it will ripple in many ways." Critics of the GENIUS Act argue it compromises crypto's decentralization and could enable corruption, such as officials favoring specific stablecoins under new regulations. "We need guardrails that ensure that government officials aren't openly asking people to buy their coins in order to increase their personal profit or their family's profit," Sen. Jeff Merkley (D-Ore), who opposed the current version of the bill, said during Wednesday's session. "Where are those guardrails in this bill? They're completely, totally absent." Some critics also say the bill gives too many entities the ability to create new stablecoins which could make enforcement of the regulation standards more difficult. "As long as issuers are clearly following the rules and regulations, more competition in the stablecoin landscape is both welcome and necessary," Puckrin says. During the GENIUS Act's passage through the House, some members sought to attach amendments, including proposals from the Credit Card Competition Act. The latter, introduced in 2023 but previously stalled, aimed to boost credit card payment competition by requiring issuers to allow more than two networks (beyond mainly Visa and Mastercard) to process transactions. Some legislators saw enough similarities between the credit card and stablecoin marketplaces to justify adding the CCCA to the GENIUS Act, but Senate Majority Leader John Thune (R-S.D.) nixed that plan, fearing the CCCA's inclusion could cost votes in favor of the larger bill. Still, the GENIUS act could impact retailers outside of crypto, Puckrin says. "We'll likely see stablecoins increasingly adopted as a digital alternative to the U.S. dollar, so banks, fintechs and merchants will be forced to offer stablecoin payment options," he says. "Eventually, payment networks like Visa and Mastercard will have to do so as well, which will lead to lower fees. The CCCA proposals are an inevitable evolution of the GENIUS Act. It will just take a little longer if it isn't written into law."
Yahoo
28-02-2025
- Business
- Yahoo
Bitcoin nears $80,000 level in worst month since 2022
Bitcoin (BTC-USD) fell nearly 5% early Friday to just above $82,000 — the cryptocurrency's lowest level since early November. The drop puts bitcoin down nearly 20% over the past month — its worst performance over a month since June 2022. Friday's decline comes a day after President Donald Trump said 25% tariffs on goods from Canada and Mexico, as well as an additional 10% tariff on Chinese imports, are set to go into effect March 4. Nic Puckrin, financial analyst and founder of The Coin Bureau, said in an email to Yahoo Finance earlier this week that the 'sharp sell-off in crypto on renewed tariff fears shows that Bitcoin, and even altcoins, are now entirely driven by politics.' 'This was never the intention for Bitcoin – indeed, it was designed as an anti-political asset – but this is where we are right now.' Bitcoin has rallied since the election of Donald Trump, soaring 44% from election day in November to a high of $109,115 on Jan. 19. Investors have been optimistic about the president crypto-friendly stances creating a looser regulatory environment for the industry than the prior administration. Trump has appointed venture capitalist David Sacks to a newly created White House role of crypto czar, and his pick for SEC chair is well-known crypto lawyer Paul Atkins. But recent losses have partly erased those gains as the so-called Trump trade loses steam. Macroeconomic uncertainty and a $1.5 billion hack of a crypto exchange have contributed to the pullback among investors. Puckrin said in his commentary Feb. 25, 'If worries over tariffs continue to escalate, bitcoin could continue falling further in the short term,' adding, 'A key support level to watch would then be $71,000.' Other crypto stocks dropped more modestly Friday. Coinbase fell 1.3%, and Riot Platforms fell 1.6%. Strategy, the largest corporate holder of bitcoin, dropped less than a percentage point. Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @ Email her at
Yahoo
23-02-2025
- Business
- Yahoo
The meme-coin explosion is already getting exhausting
Meme coins have grown from an obscure corner of crypto to a booming market all their own. But with their rise has come an increase in scams and criminality, sources told Business Insider. Industry players say they've grown tired of the endless flow of new tokens and bad actors. The meme coin trade has morphed into something bizarre. Even for the uninitiated, the once-obscure corner of the crypto market has become hard to ignore. Often with no actual use case and values derived from speculation, meme coins have gone mainstream, for better or worse. The tokens have been generating baffling headlines and lots of frustration. This week, Argentine President Javier Milei was in hot water after promoting Libra, a meme coin that tanked seismically soon after. Nansen Research found that 86% of investors lost $251 million, a scandal that's left Milei facing impeachment calls for his role in what critics describe as a fraud. Milei denied any involvement with the coin or its developers and deleted his post. Regardless, the whole affair had the look of a rug-pull to frustrated crypto players. Scams are a regular occurrence in the meme coin universe, and its reputation for fraud has grown alongside the market, experts told Business Insider. "Everyone's sick and tired of the memecoins," said Nic Puckrin, founder of The Coin Bureau. "Sentiment now is probably as low, or probably lower than the FTX collapse," he said. "It's just every single day there's a new meme coin launch with some new celebrities pumping and dumping some stuff." It wasn't always this way. When meme coins started edging into crypto consciousness around 2014, they were mainly community-building projects, Puckrin told BI. "The initial concept was fun assets that communities could be part of, and the whole memetic culture of memes in general on the internet could now be encapsulated in a shared token, right?" he said. Add to that their low valuations, and the memecoin market became something of a haven for retail investors. Even as momentum stalled amid crypto winter in 2022, Vic Laranja, a content creator and meme coin trader, said the market was still trafficked mainly by crypto enthusiasts who believed in the technology. That was before last year. "There's been just a drastic emergence of retail investors who see meme coin trading almost as a new form of gambling." Puckin also lamented the state of the market. "Memecoins are no longer about community, no longer about fair launches, no longer about aspects against the [venture capitalists]." he said. "The memecoin industrial complex developed to be able to extract as much as possible, as quickly as possible, for those who invest in it, which is not what the idea was." According to Laranja, the first stage of the meme coin explosion took place around the time spot bitcoin ETFs were launched at the beginning of 2024. The resulting surge in liquidity stirred up risk appetite in the crypto market. The same month the ETFs debuted, traders were introduced to a Solana-based launchpad that simplified the process of minting the tokens. The result? An "explosion of meme coins," said Puckrin. According to Wired, there were nearly 6 million meme coins launched on the platform by January 2025. In some ways, the launchpad helped do away with some nefarious behavior. Before its existence, Laranja suspects about eight out of 10 memecoin trades were "honeypot" scams, in which a buyer cannot sell their memecoin holdings once purchased. " came into the picture, and they standardized the contract address. They made it so you had to revoke freeze authority. You had to revoke mint authority — meaning that the developer couldn't just mint a billion more tokens and keep them for themselves." But the protocol's design did not curb pump-and-dump schemes or other practices that have given meme coins their reputation as essentially another way to gamble. A class action lawsuit was brought against the firm last month, alleging that it is operating an "evolution of Ponzi and pump-and-dump schemes." Memecoin trading on the platform has ruffled investors in other ways. For a time, it allowed livestreaming as a way to promote tokens, but given the wild extremes users went to in order to draw attention their coins — from nudity, guns, and suicide threats — that went away in November. "I believe that the problem in the space right now, with the insiders and the bundlers and the snipers is not so much about the bad actors in the space, but because of the way that the protocols are set up to launch these meme coins," he said. When the Trump Organization launched its own meme token just before the inauguration, some say the dramatic price swings blew the doors open for imitators. "[Investors] would have been somewhat apprehensive to launch a meme coin just because of the regulatory risk, the risk of getting sued and whatnot," BCA Research associate strategist Juan Correa said. "Well, now the president has done it. It's okay to do it, right?" (BCA launched its own meme coin this month to prove the speculative mania was peaking.) As the frenzy stretches into the early days of 2025, exhaustion is setting in. Solana, the native token associated with the blockchain that meme coins are usually launched on, has dropped around 32% from its all-time high in January. Observers also say there will be consequences for the market if meme coins proliferate at such a dizzying rate. Correa said the tokens detract from more fundamental crypto assets. They are an "extractive force, Puckin added, noting that profits made on these trades are rarely recycled back into the crypto space. "It's not going to necessarily go into developing an innovative product that's going to help solve real problems for the world, which is what I think we all think crypto and the blockchain can do," Puckrin said. He said there's an estimated $6 billion worth of crypto liquidity has been leeched from the ecosystem due to meme coins. Still, the regulatory path ahead is unclear. On Thursday, the Securities and Exchange Commission announced the creation of a unit to combat cybercrime, including blockchain fraud. However, earlier this month, Commissioner Hester Pierce questioned whether meme coin oversight is an SEC responsibility. In Puckrin's view, this goes back to an ongoing regulatory question about what type of asset crypto is and, therefore, whose jurisdiction it falls under. "But what's been happening more recently, I think, especially with a lot of these memecoin launchers, is pure criminality and insider trading," he said. "And insider trading doesn't necessarily have to be a security or a commodity." To Laranja, clear rules will be the catalyst to take the crypto space to the next level. Until then, he feels sentiment has fallen to deep lows. "People are basically calling it quits, game over," he said. "I think there's a beautiful future ahead of us, but we need clarity first." Read the original article on Business Insider Sign in to access your portfolio
