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The GENIUS Act: A New Era for Stablecoins and Controversies Surrounding it
On July 18, 2025, the GENIUS Act was signed into law by President Donald Trump, marking a pivotal moment in US cryptocurrency regulation. This legislation establishes a formal regulatory framework for the significant and growing stablecoin market, estimated at around US$250 billion.
Trump expressed pride in the act, stating, "We worked hard. It’s a very important act, the GENIUS Act. They named it after me." The bill garnered unexpected bipartisan support in the House, receiving approval from 206 Republicans and 102 Democrats. However, not everyone is on board with this new legislation.
One of the most vocal critics is Republican Representative Marjorie Taylor Greene. Despite her usual support for Trump, she has described the GENIUS Act as a deceptive means of paving the way for a central bank digital currency (CBDC) in the US. Greene has raised alarms that behind the appealing façade of stablecoins, there lie potential surveillance applications akin to those of a CBDC. She notes the absence of any clause explicitly banning CBDCs in the GENIUS Act and claims that leadership in the House prevented amendments aiming to include such protections.
In her words, "The Federal Reserve has been planning a CBDC for years, and this will open the door to transition to a cashless society, where the government could weaponise digital currency against its citizens."
While the GENIUS Act doesn’t outright prohibit CBDCs, a separate piece of legislation, the Anti-CBDC Surveillance State Act, passed alongside it, explicitly forbids any establishment of CBDCs. This companion bill is now awaiting consideration in the Senate.
Industry Perspectives on the GENIUS Act
The crypto community is divided regarding the implications of the GENIUS Act. Bitcoin enthusiast Justin Bechler expressed scepticism, claiming that the act reflects a centralised power structure’s historical tendency to impose control under the guise of necessity. He posited that while proponents may argue it is not a CBDC, its mechanisms are effectively indistinguishable from those of a state-controlled currency enforced through compliant intermediaries.
Other voices in the cryptocurrency space have echoed similar concerns. Jean Rausis, founder of the decentralised exchange SmarDex, labelled the GENIUS Act a "CBDC Trojan horse," stating that stablecoins without decentralisation ultimately lose their essence.
Contrarily, some industry experts argue that there are provisions in the GENIUS Act explicitly forbidding the creation of a retail CBDC. Journalist Eleanor Terrett highlighted text within the act, suggesting it constrains the Federal Reserve’s authority to engage in any CBDC-related activities. Terrett asserted, “There is language in GENIUS that would explicitly prohibit the Fed from creating a retail CBDC.”
Senator Tim Scott reinforced this assertion by clarifying that the GENIUS Act restricts any expansion of the Federal Reserve’s authority, ensuring that it cannot pursue a CBDC initiative.
Conclusion
The signing of the GENIUS Act marks a significant moment for the US stablecoin market and ignites widespread debate over what this legislation truly means for the future of digital currencies and potential governmental surveillance. As policymakers and industry participants navigate these complex issues, the implications of the GENIUS Act and its counterpart will be scrutinised closely. The ongoing discussions reflect a broader narrative on digital assets, governmental control, and the delicate balance between innovation and regulation in the evolving financial landscape.
