Trump Signs Genius Act into Law, Enabling Stablecoin Innovation in US

Last week marked a major moonstone for the digital industry as president Trump officially signed the Genius Act. This major legislation document was designed to fairly regulate, support and integrate stablecoins into the financial system of the United States.

On Friday last week, an official ceremony took place in the White House, where Trump was joined by top members of his administration and leaders of major crypto companies, including Ripple Labs, Tether, Circle, and Coinbase. These four are responsible for issuing three leading stablecoins pegged to the US dollar – RLUSD, USDT, and USDC.

Trump’s signature on the Senate-approved Genius Act, which is focused on the regulation of USD-backed stablecoins, is more than a sign of the US simply embracing blockchain and crypto. It indicates that the US seeks to lead the innovative crypto industry.

Genius Act Makes Stablecoins Legal, Setting Clear Rules

The Genius Act (short for Guiding and Establishing National Innovation for US Stablecoins) allows for the creation of a legal framework ensuring that US dollar-pegged digital assets can be issued, held, and transacted under federal control and oversight. This new law clearly greenlights stablecoins backed 1:1 by US dollars (or highly liquid Treasury instruments) and introduces a licensing system for those who are going to issue, validate them, and perform their custody.

During the press event, Trump characterized stablecoin as the future of efficient finance. He said that they help keep the dollar strong in the digital age. He also believes that the new law will make sure the US will maintain its dominion over global digital finance in the future.

“Just as I promised last year, the GENIUS Act creates a clear and simple regulatory framework to establish and unleash the immense promise of dollar-backed stablecoins,” Trump said. “This could be, perhaps, the greatest revolution in financial technology since the birth of the Internet itself.”

Under the Genius Act, stablecoin issuers are obliged to register with the necessary regulatory bodies to obtain licenses, undergo quarterly audits, and submit smart contract code for independent review. This will allow them to access banking rails and will allow them to be legally integrated with government-backed payment systems.

One of the Ripple top executives, who was invited to the event, president Monica Long, commented on this, saying that the clarity that is coming with the new law was exactly what the US crypto space had needed for years. Ripple’s chief legal officer, Stuart Alderoty, was also present, as well as Tether’s CEO, Paolo Ardoino, and Coinbase’s CEO, Brian Armstrong.

Interestingly, XRP, the token associated with Ripple, soared to a new all-time high of $3.65 on this news and a few other triggers. The previous historic price peak was reached at the very beginning of the first crypto winter, in early January of 2018, after Bitcoin hit the $20,000 ATH in December 2017.

Bitcoin Dips as Focus Shifts to Stablecoins

Still, while the broader cryptocurrency market reacted positively to the Genius Act signing, the leading cryptocurrency, Bitcoin, faced a minor pullback of almost 3%, falling from $120,900 to the $117,375 level within about eight hours. Currently, BTC is back up, trading near $119,000 once again.

Analysts believe that this decline was not due to bearish market sentiment but rather to a shift in investor focus.

Apart from stablecoins, such utility tokens used for payments as XRP, got into the spotlight. Still, analysts believe that Bitcoin remains the macro hedge and the investor shift focus will not harm it in the long term.

Even though the Genius Act does not regulate Bitcoin directly, previously BTC was already acknowledged by Trump and his administration as a “strategic financial asset,” and the president signed an executive order, commanding the creation of a Strategic Bitcoin Reserve. Unlike stablecoins, though, Bitcoin’s volatility makes it a secondary choice for use on payment networks under the new regulatory framework established by the Genius Act.

Still, despite the price dip, many investors, both retail and institutional, especially spot ETFs, continue to accumulate Bitcoin, pouring hundreds of millions of dollars into it.

New Crypto Era Begins

The signing of the Genius Act marks a historic pivot in the US regulatory policy and in the history of digital assets and finance. For the first time ever, the leading economy, the US, has legalized the use of stablecoins and intends to actively endorse them in both public and private sectors.

Even though the full implementation of this is likely to take several months, one thing is for certain – the US intends to be the leader in the stablecoin race that is gradually expanding around the whole developed world. Trump’s support of digital finance means that the crypto industry is likely to get a major boost in the next four years of his US leadership.