CALIFORNIA – Over 30 California lawmakers voted in favor of the GENIUS Act, which regulates stablecoins. President Donald Trump signed the legislation into law on July 18.
Congressman Sam Liccardo (CA-16) said the bill marks the first major cryptocurrency standards passed by Congress.
“…I voted in favor of the GENIUS Act because, without clear rules of the road, bad actors will dominate the blockchain and put investors at risk,” said Liccardo.
However, Congresswoman Maxine Waters (CA-43) opposed the act, stating it fails to give the federal government full authority over stablecoin issuers and said her ‘Stop TRUMP in Crypto Act’ would ban top officials from crypto corruption.
Stablecoins have to be backed with U.S. dollars or low risk assets
Stablecoins are cryptocurrencies meant to stay steady in value, usually by being tied to the U.S. dollar.
Under the GENIUS Act they have to be backed with U.S. dollars or government bonds and the company behind them must share monthly updates on what’s backing them.
They also have to follow strict advertising rules and can’t make misleading claims – like saying their stablecoins are backed by the U.S. government, federally insured, or official U.S. currency.
If a stablecoin issuer goes insolvent, the GENIUS Act ensures holders get paid before other creditors.
The law bars most parts of the executive branch from issuing a stablecoin, but exempts the president and vice president.
‘Wrongly exempts president and vice president from stablecoin ban’
Waters, who is the top Democrat on the House Financial Services Committee says the GENIUS Act wrongly exempts the president and vice president from the stablecoin ban.
“Why are the Republicans protecting the President to make billions and billions more dollars,” said Waters.
She noted that Trump’s crypto firm, World Liberty Financial, launched stablecoin USDOne in April. Soon after Abu Dhabi-backed M-GX bought $2 billion of it to invest in Binance. According to Waters, the Trump family stands to earn millions in interest from the deal.
Waters introduced the ‘Stop TRUMP in Crypto Act’ on May 21, to ban the president, vice president and members of congress from profiting from crypto.
GENIUS Act allows risky reserves
Waters raised other key concerns about the bill.
The GENIUS Act lets Elon Musk’s X issue a stablecoin and paves the way for Facebook to do the same, despite violating longstanding separation of banking and commerce in financial regulation, according to Waters.
She also warned that the act allows risky reserves like uninsured deposits and Bitcoin, while claiming stablecoins will be backed by safe assets. She said this puts consumers and tax payers at risk.
