On Friday, President Trump signed the first major federal law governing cryptocurrency.
It includes the GENIUS Act, a bill dealing with a type of cryptocurrency called a stablecoin. Trump recently introduced a stablecoin, the Trump meme coin, with an infusion of $2 billion from a middle eastern sovereign wealth fund.
Stablecoins are cryptocurrency that have their value tied to a stable asset such the U.S. dollar. The GENIUS Act makes it easier for banks and other entities to issue stablecoins, and the new law is expected to increase public trust in the assets and growing the industry overall.
GENIUS stands for Guiding and Establishing National Innovation for U.S. Stablecoins of 2025.
Federal regulators have six months to come up with rules for how the new law will be carried out.
“In approving this crypto-enabling bill, Congress surrendered to the onslaught of crypto political spending and legitimized the world’s biggest Ponzi scheme,” Bartlett Naylor, a financial policy advocate for Public Citizen, a consumer advocacy organization, said in a statement.
“To add insult to injury, they also forfeited an opportunity to stop Trump’s massive crypto grift, some of the most heinous and flagrant corruption in American presidential history,” Naylor said.
Trump once dismissed bitcoin, the most popular crypto, as “based on thin air.”
“It is a ‘scam,’” he said, adding “It can facilitate unlawful behavior, including drug trade and other illegal activity.” Now, he’s the self-proclaimed crypto president.
The GENIUS Act is flawed because it exposes taxpayers, consumers, and the financial system to unacceptable risk, Sen. Jack Reed, D-RI, said in testifying on the bill, adding it creates venues for criminals, terrorists, and rogue governments to finance their illicit activities.
“The GENIUS bill says that stablecoin companies no longer need to comply with many of these consumer protection laws,” Reed said. “Instead, they can comply with a Federal framework containing very few of them.”
Americans for Financial Reform, or AFR, a coalition of national and state organizations that have joined together to improve the financial sector and to make sure it’s working for all Americans, said in a fact sheet that the GENIUS Act dangerously combines banking and commerce to allow conflicts of interest, economic concentration, and risk of collapse.
The AFR also said the law will expose consumers to more risk with few protections including little protection for consumers from failed stablecoins, no redemption protections, and no application of federal and state consumer protection laws.
“The GENIUS Act is riddled with loopholes and contains weak safeguards for consumers, national security, and financial stability,” Sen. Elizabeth Warren, D-Mass, said in testimony on the bill.
Warren said the GENIUS Act lacks the basic safeguards necessary to ensure that stablecoins don’t blow up the nation’s entire financial system.
“The bill permits stablecoin issuers to invest in risky assets and allows them to engage in risky non-stablecoin activities, like private credit or derivatives trading,” she said. “At the same time, the bill constrains regulators’ ability to apply capital and liquidity safeguards to limit the chances of stablecoin failures.”
Consumer Reports, a testing and advocacy organization, had urged lawmakers to oppose the GENIUS act.
“Stablecoins should help consumers – not put them in harm’s way,” Chuck Bell, advocacy program director at Consumer Reports, said in a statement. “Consumers increasingly encounter stablecoins in apps, wallets, and digital platforms – and they deserve clear rules and real protections.”
Bell said the GENIUS Act doesn’t provide the safeguards that consumers reasonably expect when they use products that function like digital cash.
“Unlike traditional financial products, stablecoins are currently not subject to consistent protections like deposit insurance, guaranteed redemption rights, or dispute resolution mechanisms,” he said. “The GENIUS Act does not fully close these gaps.”
