The recently passed Genius Act in the US Senate has ignited a firestorm of debate within financial and cryptocurrency circles. Enacted on June 17, 2025, this legislation aims to regulate stablecoins, a type of cryptocurrency pegged to stable assets like the US dollar, by allowing banks and corporations to issue their own digital currencies under specific guidelines.
Proponents argue that the Genius Act is a groundbreaking step towards integrating cryptocurrency into mainstream financial systems. By providing a regulatory framework, the bill seeks to ensure stability and transparency in the rapidly growing $200 billion stablecoin market, potentially boosting investor confidence and fostering wider adoption of blockchain technology.
However, critics warn that this legislation could pose significant risks to bank stability. They argue that allowing banks to issue stablecoins might prioritize stablecoin holders over other customers in the event of bankruptcy, potentially undermining trust in traditional banking systems. Some economists even caution that this could lay the groundwork for the next global financial crisis.
Further concerns revolve around the impact on dollar dominance and global financial stability. Critics suggest that poorly regulated stablecoins could destabilize markets if not backed by robust, enforceable audit practices, a challenge highlighted by experts as a potential flaw in the current framework of the Genius Act.
The debate continues as stakeholders from both the crypto and traditional finance sectors weigh in on the long-term implications. While some see the Genius Act as a promising milestone for innovation, others fear it may be a risky gamble that prioritizes short-term gains over systemic security.
As the rollout of this legislation unfolds, all eyes will be on how regulators and financial institutions balance innovation with risk. The future of stablecoins—and their impact on bank stability—remains a contentious topic that could shape the trajectory of global finance in the coming years.
Alfred Lee
