For years, the U.S. government has adopted a hands-off approach to cryptocurrencies, deeming them too dangerous for average Americans — and too risky for the country's financial system.
Not anymore.
In a historic vote in the House of Representatives earlier this week, Congress approved the country's first ever major crypt legislation, signaling a sea change in the U.S. stance towards these digital currencies.
The overall market valuation of cryptocurrencies hit a record $4 trillion soon after the vote in a reflection of the excitement being felt across the sector.
And in a ceremony on Friday, President Trump — who has vowed to make America the "crypto capital of the planet" — signed the bill into law to the cheers of Republican lawmakers.
"This afternoon, we take a giant step to cement American dominance of global finance and crypto technology as we signed the landmark Genius Act into law," Trump said.
That law sets new rules for a more narrow — yet promising segment of the crypto market called stablecoins. It sets the stage for more laws to come: Two other crypto-related bills are making their way through Congress now.
But it's one bill in particular that the crypto sector wants. Called the CLARITY Act, it was also passed by the House on Thursday as part of what Republican lawmakers have called "crypto week." The bill would hand policing power of the crypto sector to a smaller regulatory body called the Commodity Futures Trading Commission.
Such a shift would revamp how digital currencies are regulated in the U.S., and critics fear it would lead to far weaker policing of what they consider to be a dangerous segment of the financial sector.
It now heads to the Senate where it could face a more uncertain future — and crypto critics have vowed to fight it tooth and nail.
Crypto advocates see financial innovation
For crypto supporters, though, it was a week to savor.
The crypto sector has long believed digital currencies represent the future of finance.
While they acknowledge there are less savory parts of the sector — such as the "meme coins" or cryptocurrencies based on silly Internet trends — they argue cryptos can provide real value.
Stablecoins are one example. They are viewed as a safer type of cryptocurrency because each stablecoin must be backed by dollars or other currency such as euros, meaning that if you buy $1 in stablecoin, the issuer that provided it has to keep $1 in reserve.
And stablecoin companies see big potential. Because stablecoins are backed by dollars and other currencies, they are effectively considered to be just about as good as cash.
Key industry players believe stablecoins will allow people and companies the ability to transfer money as digital currency anywhere in the world instantaneously, regardless of borders, without onerous and expensive bank or money transfer fees.
Any company that receives, say, $100 in stablecoins can simply convert them into $100 in real dollars because each stablecoin has to be backed up. People within the industry believe that is a gamechanger.
"I think over the next 10 to 20 years, we're going to see stablecoins become the default method for commerce," says Kevin Lehtiniitty, CEO of Borderless.xyz, a company that helps stablecoin payments.
But critics just see a financial disaster in the making
That's not how critics see it, however.
The GENIUS Act does offer some protections, such as mandating stablecoin companies maintain proper reserves and be transparent about how the money is held. The bill also establishes anti-money laundering rules to make it harder for shady actors such as drug dealers to use stablecions.
But critics say the rules are too weak and have been too influenced by the crypto industry through heavy lobbying and big campaign donations. The crypto industry spent over $100 million in Congressional races last year and is building an even heftier war chest ahead of next year's midterms.
"It's all hype and there's not much 'there there,'" says Amanda Fischer, policy director and chief operating officer for consumer advocacy group Better Markets. "There's certainly problems in the current payment system, but they are not solved by this bill. And in fact, a lot of problems are going to be exacerbated by the bill."
Problems that would ultimately hurt consumers and the economy if stablecoins get increasingly adopted without adequate protections.
The stablecoin industry strongly defends the rules put in place by the GENIUS Act, however, which was passed with significant Democratic support.
"The law sets a very, very clear, standard, one that even banks, large banks would have to abide by if they issue payments in stablecions," says Dante Disparte, chief strategy officer for Circle, which issues one of the world's largest stablecoins.
"You wouldn't have had 102 Democrats voting alongside the Republican counterparts for the Genius Act if it was going to fail such a simple test as consumer protection," he adds. "I think this bill does the most of any financial regulation we have had in decades if not in American history in terms of advancing a pro-growth, pro-competition pro-consumer agenda."
The crypto sector vows to go on, with President Trump's backing
But despite the criticism, the crypto sector believes the wind is on its side.
The crypto industry is armed with millions of dollars they can steer towards campaign donations — and backed by the most powerful supporter of all: President Trump.
Trump and his family have controversially waded into the crypto sector, with financial interests in World Liberty Financial, a company that's investing in different aspects of the industry, including in launching its own stablecoin.
For the crypto sector, the next big target is now the CLARITY Act. The bill intends to take away some of the policing power from the Securities and Exchange Commission, widely considered as Wall Street's cop — but which had antagonized the crypto sector under the Biden administration.
Under previous chairman Gary Gensler, the SEC went hard after the crypto sector along with the Department of Justice, including helping convict former FTX CEO Sam Bankman-Fried, who was ultimately sentenced to over 20 years in prison.
The goal under the Biden administration was to get crypto companies to comply with the same rules that Wall Street firms and other financial firms must follow.
But crypto companies have long maintained that digital currencies are a new, innovative financial product that needs its own set of rules — rules that critics and cynics say the crypto sector would like to shape to its advantage by spending heavily in elections.
"People can end up being put in a situation with the worst of all worlds, where they have all these new products flying at them with less oversight and more risk," says Mark Hays, associate director for cryptocurrency and financial technology at Americans for Financial Reform.
"We're waging an uncontrolled experiment on our financial system using a technology that hasn't delivered yet as promised."
For now though — with a major victory at hand after the historic passage of the GENIUS Act — the crypto industry marches on.
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