House Republicans this week advanced a trio of bills aimed at establishing federal regulations for cryptocurrency, marking a significant victory for the industry and fulfilling a campaign promise made by President Trump to enhance digital currencies in the United States.
These bills would effectively endorse an industry that has faced skepticism from federal lawmakers, facilitating the transition of cryptocurrency from a controversial technology experiment to a recognized financial and commercial asset.
The cryptocurrency sector invested over $100 million in supporting pro-crypto candidates in the previous election cycle and has actively lobbied for bipartisan backing of the legislation.
The first piece of legislation, known as the Genius Act, would create a regulatory framework for stablecoins, digital currencies pegged to the U.S. dollar. Stablecoins are viewed as a link between traditional currency and cryptocurrency, designed to mitigate the volatility associated with other cryptocurrencies like Bitcoin.
Supporters of the Genius Act argue that it would modernize the financial system and bridge gaps between traditional markets and cryptocurrency. However, critics contend that the bill is too lenient and lacks sufficient consumer protections against fraud and money laundering. Some Democrats have expressed concerns regarding the absence of strong anti-corruption measures, particularly in light of a Trump-affiliated crypto firm securing a substantial investment from a fund backed by the Abu Dhabi government.
Despite these concerns, the bill passed with bipartisan support, representing the Senate's first approval of significant cryptocurrency legislation. The House is expected to vote on the measure Thursday afternoon, which would then be sent to President Trump for his signature.
The second bill, the Clarity Act, proposes a broader regulatory framework for various crypto assets and aims to transfer regulatory authority from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC). This shift is intended to provide clearer regulations for the crypto industry, which has often found itself in a gray area between regulatory bodies.
Proponents argue that the Clarity Act is essential for establishing regulatory clarity, while opponents, including many Democrats, warn that it could allow the crypto industry to evade crucial financial regulations, potentially jeopardizing consumer protections. The House is anticipated to pass this bill later Thursday, sending it to the Senate, where its future remains uncertain.
The third bill seeks to prohibit the Federal Reserve from issuing its own digital currency, known as a central bank digital currency (CBDC). While central banks in other nations are exploring digital currencies, a Fed-issued currency would be government-backed, raising privacy concerns among cryptocurrency investors.
Earlier this year, President Trump signed an executive order preventing federal agencies from developing a CBDC. Some conservative House Republicans threatened to block the cryptocurrency bills unless stronger assurances regarding the CBDC ban were included. Conversely, many Democrats argue that a CBDC could enhance stability in the cryptocurrency markets and foster public trust in digital currencies.
The House is expected to pass this measure as well, which would then move to the Senate. To secure passage of the crypto package, House Republican leaders have agreed to incorporate its provisions into the annual defense policy bill, aiming to ensure its enactment into law.