House Passes GENIUS Act, Establishing Federal Framework for Stablecoins

The House of Representatives passed the groundbreaking GENIUS Act on Thursday by a decisive 308-122 vote, marking the first time Congress has approved comprehensive stablecoin legislation and sending the historic bill to US President Donald Trump's desk for his expected signature, Reuters reported .

The legislation establishes a federal regulatory framework for the $250 billion stablecoin market, requiring issuers to maintain 100% reserves in high-quality liquid assets, undergo monthly audits, and register with federal or state regulators. The bill received strong bipartisan backing, with 206 Republicans and 102 Democrats supporting the measure.

"This is a watershed moment for the digital asset industry," Steven Goldfeder, CEO and co-founder of Offchain Labs, creator of Arbitrum, told Blockhead. "The most significant benefit is clarity—it eliminates much of the legal ambiguity that has slowed institutional entry," Goldfelder said.

The vote caps off a tumultuous "crypto week" that saw conservative Republicans initially block the legislation before reaching a deal with President Trump. House Speaker Mike Johnson had to cancel floor votes earlier in the week after a dozen conservatives staged a procedural rebellion, demanding the stablecoin bill be packaged with broader crypto legislation.

The drama was resolved after holdouts met with Trump at the White House , ultimately agreeing to advance the GENIUS Act as a standalone measure while tying a ban on central bank digital currencies to the annual defense authorization bill.

Regulatory Framework Takes Shape

Under the new framework, stablecoin issuers must choose between federal licensing through the Office of the Comptroller of the Currency or state-level oversight. The legislation mandates that issuers back their tokens with cash, Treasury bills, or other approved high-quality assets, with monthly third-party audits required to verify reserves.

The bill also prohibits algorithmic stablecoins – digital tokens that maintain their peg through code rather than asset backing – following the spectacular collapse of TerraUSD in 2022 that wiped out $60 billion in value.

"Markets like the UAE have already demonstrated that well-defined rules accelerate both innovation and adoption," Omar Elassar, head of global strategic partnerships at Animoca Brands Middle East, said in comments to Blockhead. "With the U.S. now moving in step, we're entering a phase where stablecoins could anchor not just Web3, but the future of global finance."

Industry Celebrates, Critics Raise Concerns

The crypto industry, which invested heavily in pro-crypto candidates during the 2024 elections, hailed the legislation as validation of their lobbying efforts. The House also passed the CLARITY Act, which delineates regulatory jurisdiction between the SEC and CFTC for digital assets, sending it to the Senate.

However, Democratic critics raised concerns about potential conflicts of interest and insufficient consumer protections. Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, warned that the legislation was inadequate.

"By passing this bill, Congress will be telling the world that Congress is OK with corruption, OK with foreign companies buying influence," Waters said during floor debate.

Some Democrats also expressed concerns about the Trump family's crypto investments, which have reportedly increased their wealth by billions of dollars as the administration loosens crypto regulations. The White House has denied any conflicts of interest, stating Trump's assets are held in a trust managed by his children.

Market Implications

The legislation's passage is expected to unlock significant institutional capital that has been waiting on the sidelines for regulatory clarity. Major financial institutions have been hesitant to enter the stablecoin space due to regulatory uncertainty, but the new framework provides the compliance structure they've been seeking.

The bill's impact extends beyond stablecoins, potentially accelerating the integration of digital assets into traditional finance. With clear rules in place, banks, broker-dealers, and other financial institutions can begin developing crypto products and services without fear of enforcement actions.

The Senate previously approved the stablecoin legislation last month after overcoming initial Democratic opposition. With President Trump's support and the House's overwhelming approval, the GENIUS Act is expected to be signed into law in the coming days, cementing the United States' position as a global leader in digital asset regulation.