A pivotal moment for cryptocurrency regulation unfolded as the U.S. Senate passed the GENIUS Act, aiming to establish a framework for stablecoins. This development, dated June 2025, marks a significant step toward a long-anticipated regulatory regime. Yet, as lawmakers celebrate, analysts caution that the road ahead may be fraught with complications that could undermine the very stability the bill seeks to ensure.
A Patchwork of Oversight
The GENIUS Act, alongside its counterpart, the STABLE Act, meanders through the legislative process in the House. While the bills share common goals, their divergences may lead to a regulatory quagmire. Critics argue that the current drafts perpetuate a bloated bureaucracy, reminiscent of past financial oversight failures. “It’s like we’re setting the stage for a sequel to the 2008 crisis,” says crypto analyst Jordan Mayer. “Too many cooks in the regulatory kitchen can lead to oversight chaos, and that’s a recipe we can’t afford to repeat.” This sentiment echoes concerns raised in our coverage of the Senate’s passage of the Stablecoin Bill.
The proposed legislation offers stablecoin issuers an eye-popping choice: 55 potential regulators. This buffet of options might trigger a race to the bottom, with issuers gravitating toward the most lenient oversight. Mayer warns, “When regulation becomes a pick-your-own-adventure, it opens doors to risk and instability.”
Redundancy and Bureaucratic Tangles
The GENIUS Act’s stipulations demand that the Secretary of the Treasury ensure state regulations align with federal standards. This sounds straightforward, but the reality is far from it. As industry insiders know, the formal rulemaking process is anything but swift. And then, there’s the matter of joint rulemaking—a bureaucratic dance that often stumbles.
“It’s like herding cats,” remarks an anonymous former regulator familiar with such processes. “Getting multiple agencies to agree is a Herculean task, fraught with delays and disagreements.” This complexity is further highlighted by US senators questioning Meta’s stablecoin plans, which adds another layer to the ongoing debate.
Adding to the complexity, interest-bearing stablecoins remain outside the proposed framework. The SEC’s murky jurisdiction over such assets leaves room for contention about regulatory authority. This uncertainty could stall innovation and growth in a sector that’s poised for expansion.
The Larger Implications
Stablecoins have carved out a crucial role in the global financial ecosystem, bolstering the dollar’s influence while offering a glimpse into the future of digital finance. Their systemic importance cannot be overstated; a collapse of a major stablecoin could send shockwaves through the economy, destabilizing markets and triggering defaults. This exemplifies the kind of systemic risk that demands vigilant oversight.
As the GENIUS Act edges closer to becoming law, questions linger about whether it can adequately address these risks. Skeptics argue for a more streamlined approach, advocating for the Federal Reserve as the singular regulator. “Consolidating oversight could eliminate redundancy and focus efforts on genuine risk mitigation,” suggests industry consultant Rachel Lin. “We need a regulatory body that understands the nuances of stablecoins and can act decisively.”
A Call for Smarter Regulation
The debate surrounding the GENIUS Act highlights a broader issue: the need for a more agile regulatory structure that fosters innovation while safeguarding stability. Blockchain technology holds immense potential, yet the current regulatory landscape threatens to stifle progress. As Congress grapples with the intricacies of stablecoin legislation, the larger conversation about regulatory reform looms large.
Looking ahead, the path to effective regulation is strewn with challenges. Lawmakers must navigate these complexities with an eye toward both immediate and long-term impacts. The GENIUS Act, though imperfect, represents a pivotal opportunity to lay the groundwork for a more coherent and effective regulatory framework. The stakes are high, and the world is watching.
Source
This article is based on: We Need to Fix the So-Called GENIUS Bill
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
