Senate Is Poised to Pass Stablecoin Bill as Crypto Eyes a Bigger Prize — Barrons.com

By Joe LightThe Senate is poised to pass a bill to regulate stablecoins, the lifeblood of the crypto market, awarding the industry a victory it has sought for years. The industry's bigger goals will be harder to achieve, and risk delaying Tuesday's win.Lawmakers are scheduled on Tuesday afternoon to vote on the bill, which establishes rules for stablecoins, a type of crypto token that is most often pegged to the dollar and backed by reserves. The bill cleared a key procedural hurdle in May and is expected to easily garner the votes needed to pass.After that, it would head to the House of Representatives. Some lawmakers hope to get it to President Donald Trump's desk by the end of July.Among other provisions, the bill — called the GENIUS Act — limits stablecoin reserves to safe, liquid assets such as Treasuries, clarifies how they're regulated, and creates a path for banks to issue their own coins.Right now, stablecoins are primarily used on crypto exchanges to trade for other tokens, such as Bitcoin or Ether. But crypto and financial industry executives think that the coins could one day dominate payments, competing with bank and wire transfers and credit cards.Tether Holdings issues the largest stablecoin, USDT, which has a market value of $155 billion. Circle Internet Group, which recently held an initial public offering, issues the second-largest, USDC, with a $61.6 billion value.At least some crypto industry executives, however, want lawmakers to go even further. They want to use the momentum from the GENIUS Act to advance a much broader bill that tackles not just stablecoins but regulation for crypto trading platforms and other cryptocurrencies.That could be achieved by pairing the Senate stablecoin bill with a House bill, called the CLARITY Act, that would remove most tokens from the remit of the Securities and Exchange Commission. Former SEC Chair Gary Gensler brought dozens of lawsuits against token issuers and exchanges including Coinbase, accusing them of violating securities laws.Crypto executives for years have sought a bill that would limit the agency's authority."We need a comprehensive regulatory framework for all types of digital assets," wrote Coinbase CEO Brian Armstrong in an X post last week. "Congress should pass the CLARITY Act along with the GENIUS Act into law. 52 million American crypto owners are counting on it,"House Financial Services Committee Chairman French Hill (R., Ark.) has said it is crucial to pass both the stablecoin and CLARITY legislation. That has led to speculation that his committee might try to combine the bills and send them back to the Senate for a final vote.That strategy might backfire. The stablecoin bill gained enough support from Democrats to avoid a filibuster, but only with the backing of some Democrats who threatened to withdraw at the last minute over concerns about Trump's crypto business interests.Since that vote in May, the Trump family's ties have only grown. In a financial disclosure last week, the president reported more than $57 million in crypto-related profits.A bill to regulate the crypto markets is also more controversial than one to regulate stablecoins. Many Democratic lawmakers don't believe that the SEC should be blocked from overseeing the token market. There is disagreement within the crypto industry itself on when a token is sufficiently "decentralized" to warrant lighter regulation."There is broad agreement on what to do with payment stable coins. There is far less agreement on how to broadly regulate crypto," said TD Cowen analyst Jaret Seiberg in a research note on Tuesday. Seiberg said trying to combine the bills could delay enactment of the stablecoin bill from this summer to 2026.Tuesday's Senate vote is a watershed moment for cryptocurrencies, but the industry has much further to go.Write to Joe Light at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.