Cryptocurrency Set for Safeguarding: Key Vote Approves the Genius Act – Here’s What You Need to Know

The Senate advanced the proposal on Monday with a vote.

With groundbreaking legislation aimed at overseeing certain types of cryptocurrencies.

The law faced some opposition.

from

Democrats

over the past several weeks during President

Donald Trump

is related to cryptocurrency business ventures; however, the legislation ultimately garnered support from 16 Democrats in the Senate, including

New Jersey

Sen.

Cory Booker

and

California

Sen.

Adam Schiff

,

ABC News noted.

The proposal, supported by the cryptocurrency sector,

implements rules for stablecoins, a type of

cryptocurrency

linked to the worth of another asset, for example the U.S. dollar or gold.

Enthusiasts celebrated the bill as a means to safeguard consumers and establish benchmarks for the sector, enabling cryptocurrency to gain broader acceptance as an instrument for digital payments and various financial activities.

Critics of the legislation contended that it fails to tackle potential conflicts of interest, exemplified by actions taken by the president, and raised worries that insufficient regulation could jeopardize both consumers and economic stability.

Christian Catalini, who founded the MIT Cryptoeconomics Lab, backs the proposal. He informed ABC News that this bill “paves the way for these assets to become widely accepted.”

Here’s what you should understand about the GENIUS Act:

The GENIUS Act regulates the issuance and exchange of stablecoins. These digital assets are designed to have lower volatility compared to other cryptocurrencies, which often experience significant fluctuations in value, making them more difficult for everyday transactions.

The law sets rules for entities issuing stablecoins. It requires these firms to hold reserves backing the coins so they can ensure customer redemptions might not occur during mass sell-offs of cryptocurrencies.

This proposed law would mandate that issuers provide coinholders with preferential treatment regarding repayments should the company face bankruptcy. Additionally, the legislation requires issuers to comply with specific anti-money laundering regulations as well as measures aimed at preventing terrorist activities.

Supporters of the bill argue that it introduces protections for consumers and enables traditional financial institutions to join the ecosystem, thereby expanding the market for digital currencies.

Catalini informed ABC News that the new law “unleashes a deluge.”

“You’ll notice entries from numerous issuers. Customers will thus enjoy a wider range of options. This increased variety will foster greater competition and innovation within payment systems,” he explained.

Catalini said that the new rules remove the pressure from consumers to distinguish between good and bad actors in the sector and instead make space for competition based on the quality of the products put forward by the firms entering the stablecoin sphere.

“It turns into a competition about which side can provide superior use-cases and features to both consumers and businesses more quickly,” he noted.

Meanwhile, critics contend that the bill consists of lenient regulations, favorable to the industry, which do not adequately safeguard consumers or prevent illicit activities related to stablecoins.

Massachusetts

Democratic Senator

Elizabeth Warren

stepped onto the Senate floor on Monday to state, “Although a robust and stable cryptocurrency legislation would be ideal, this inadequate bill is even more detrimental than having no bill whatsoever.”

Critics contend that the legislation fails to adequately address the issues related to conflicts of interest stemming from Trump’s involvement in the stablecoin market.

In March, the crypto company World Liberty Financial, backed by Donald Trump, released a stablecoin. Earlier this month, an investment firm based in

Abu Dhabi

He used the coin to invest $2 billion in Binance, a cryptocurrency exchange platform. This investment had the potential for Trump’s company to benefit financially from the arrangement. However, the President has denied any impropriety regarding this matter.

Nevertheless, the legislation contains a provision that would “prevent any member from”

Congress

Or prevent senior executives or government officials from introducing a payment stablecoin product while they serve in a public capacity.”

Warren continued to contend that the legislation fails to address issues related to Trump’s business dealings.

“This legislation offers additional chances to grant benefits such as tariff exemptions, pardons, and governmental positions to purchasers of Trump’s coins,” she stated.

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