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 GENIUS Act
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.
Most entities now considering tapping into stablecoins amid the GENIUS Act’s passage say they would first use them for largely “back-end” purposes, like reducing fees paid by merchants to credit card companies or more easily converting currencies from cross-border payments.
Mainstream financial institutions are interested. The Wall Street Journal has reported several large U.S. banks, along with the payments platform Zelle, are in talks about issuing a joint stablecoin. While Zelle is free for its users, the cost of running it shows up elsewhere in the form of other fees charged by banks.
There’s little dispute about the potential of stablecoins to make back-end operations cheaper and more cost effective. Company-specific stablecoins could also allow for specially designed offers or discounts on their products if they pay using the company’s token.
The controversy over them comes in three parts.
The first is Trump and his family’s interest in stablecoins — namely the one issued in March by World Liberty Financial. Launched in 2024, World Liberty is majority-owned by the Trump Organization, though no family member is a director and the president has previously said he is not involved in active management of the firm. While the World Liberty stablecoin has yet to gain any kind of mainstream traction, it’s already been selected to back a $2 billion investment by Abu Dhabi in crypto firm Binance. World Liberty’s co-founder is Zack Witkoff, son of Trump’s Middle East envoy Steve Witkoff.
The Trump family has made approximately $500 million from World Liberty since the platform was launched, according to Reuters calculations.
Beyond Trump’s potential conflict of interest, the GENIUS Act raises the prospect of a proliferation of privately issued stablecoins, which could force consumers to use different currencies at each place they shop at, instead of just the plain old dollar.
The potential headache could be solved through a centralized app, but it would likely mean consumers would have to create their own crypto wallets — a cumbersome task that also raises the potential for hacks.
The second, more profound risk comes from the fact that stablecoin issuers essentially become their own banks. According to Frayer, the GENIUS Act essentially allows stablecoin issuers to bypass most regular banking protections and police themselves — something he says has never led to good outcomes.
Frayer told NBC News that the crypto industry is rapidly forming increasingly centralized entities while vaulting headlong into the same risks that led to the financial crashes of 1929 and 2008.
“The reason that banking insurance and consumer protections exist is because of the Great Depression and the Great Recession,” he said. “If we go back to a system with a whole bunch of unregulated banks being allowed to issue stablecoins, we will end up with another financial crisis.”
Advocacy publication Consumer Reports also opposed the legislation, saying it fails to protect consumers and the economy from the risks posed by stablecoins.
“As stablecoins become more intertwined with the mainstream banking system, consumers and businesses could be exposed to higher levels of risk, which may lead to insolvencies and federal bailouts,” Delicia Hand, senior director for digital marketplace at Consumer Reports, said in a statement.
In a statement, the head of the Blockchain Association, a trade group, praised the GENIUS Act for offering “tailored” rules for stablecoins.
“This marks real momentum toward regulatory clarity that protects consumers, supports innovation, and reinforces the strength of the U.S. dollar in the digital economy,” CEO Summer Mersinger said.
The CLARITY Act
The two other bills under consideration are more statutory in nature — though one has major implications for the president’s personal businesses. The CLARITY Act, now under consideration by the Senate after receiving House approval this week, is designed to sort tokens into categories that more clearly establish whether they are to be regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission — with most falling into the latter category.
That has upset some Democrats and consumer advocates who say it could turn into a giveaway to Trump’s increasingly crypto-oriented business interests, by allowing them to bypass most standard securities rules in favor of less stringent commodities regulations.
It also gets World Liberty off the hook from facing regulatory scrutiny for its other digital token, known as WLFI. The World Liberty tokens had yet to be designated as securities by the SEC — and would no longer have to if the bill were to become law, experts say.
“Trump-affiliated World Liberty Financial would largely be exempt from regulatory oversight if this bill were to pass,” Americans for Financial Reform said in a statement. “Memecoins, such the $TRUMP coin, which has garnered the Trump Organization hundreds of millions of dollars in sales fees even as most investors have lost money on the coin, would also be permanently exempt from regulatory oversight.”
The bill nonetheless has garnered bipartisan support.
“For too long, the lack of clear guidance as to which cryptoasset type is governed by which agency has stifled development, investment, and responsible entrepreneurship,” Yuval Rooz, CEO and co-founder of Digital Asset, a blockchain firm, said in a statement. “This bipartisan effort marks a turning point, recognizing the distinct nature of digital assets and establishing a framework that supports compliance, transparency where necessary, and market integrity.
The Anti-CBDC Surveillance State Act
The Anti-CBDC Surveillance State Act, which also passed the House this week and is now before the Senate, is largely the product of GOP warnings about the introduction of a digital token overseen by the Federal Reserve and the privacy concerns that could pose.
The bill would ban the issuance of such tokens or their use for monetary policy.
However, Fed officials have said the central bank has never been close to enacting such a currency.
Other countries, dozens of other countries, as well as the European Union, have moved forward with issuing such tokens noting that they allow for faster transactions and make online financial tools more accessible.
Still, the banking industry has also opposed the creation of a CBDC and has expressed support for the law.
In a statement, the American Bankers Association said it “believes strongly that a central bank digital currency (CBDC) is unnecessary in the United States and would present unacceptable risks and costs to the financial system.”
“Issuance of a CBDC would fundamentally change the relationship between citizens and the Federal Reserve, undermine the important role banks play in extending credit, exacerbate economic and liquidity crises, and impede the transmission of sound monetary policy,” it said.
