US Senate advances the GENIUS Act, overcoming institutional resistance to stablecoin regulation.
3 min read
The Senate’s Stablecoin Bill Triumph
The US Senate recently made significant progress in stablecoin regulation by advancing the GENIUS Act, despite strong opposition from key institutional figures such as Senator Elizabeth Warren. This development marks a pivotal moment for stablecoin legislation, highlighting the limitations of the establishment’s resistance.
Institutional Opposition
In 2021, the crypto industry in America faced formidable challenges. Senator Warren, with SEC Chairman Gary Gensler, launched aggressive measures against the sector, including controversial legislative efforts that many feared would stifle the industry’s growth.
Related: GENIUS Act: Impact on Stablecoin Market
A particularly contentious provision, the DeFi Broker Rule, was part of the 2021 Infrastructure Investment and Jobs Act. This rule required blockchain protocols and node operators to collect personal data from every wallet holder, a task widely criticized as impractical.
Despite these efforts, the DeFi Broker Rule was eventually abandoned earlier this year, leaving many in the crypto community feeling relieved yet wary of future regulatory moves.
The GENIUS Act
The DeFi Broker Rule’s failure didn’t deter Warren and her allies from pursuing the GENIUS Act. Warren, a senior member of the Senate Banking Committee, utilized numerous amendments to try and halt the bill. One notable amendment attempted to impose extensive monitoring responsibilities on stablecoin issuers for all downstream transactions, a proposal that was ultimately deemed unreasonable.
Related: US Senate Approves GENIUS Stablecoin Bill
While traditional banks are expected to monitor customer activity, the notion of holding currency issuers accountable for all future token-related crimes was viewed as excessive. Such measures would be akin to holding the US Treasury responsible for every illicit cash transaction.
A Shift in Strategy
If Warren had focused on requiring stablecoin issuers to identify initial recipients of stablecoins, akin to existing banking regulations, her proposal might have gained broader support. However, her approach faced significant opposition, notably from fellow Democrats like Kirsten Gillibrand, who favored dollar-denominated stablecoins to maintain US financial dominance.
Related: Blockchain Association Urges IRS to Reconsider DeFi Broker Rule
Regulatory Implications
Warren’s regulatory tactics, while partially successful in addressing certain corruption risks associated with stablecoins, also revealed the institutional dynamics at play. Her efforts inadvertently benefited larger financial institutions like Bank of America, which have the resources to navigate complex regulatory landscapes, often at the expense of smaller, innovative crypto companies.
Ultimately, while Warren’s campaign didn’t entirely fail, it exposed the institutional agenda of controlling the crypto narrative. The Senate’s decision to move forward with the GENIUS Act underscores the evolving landscape of stablecoin regulation, setting the stage for the next phase of crypto development in the US.
Disclaimer: This article is for informational purposes only and does not constitute legal or investment advice. The views expressed are those of the author and do not necessarily reflect those of Cointelegraph.
Emily brings a decade of expertise in blockchain technology and decentralized finance (DeFi). She specializes in market trends and regulatory developments, providing in-depth analyses that resonate with seasoned investors and beginners alike. With a background in financial journalism, she is dedicated to bringing clarity to the fast-paced world of crypto.
