Last Thursday, after two extensive sessions, every Republican barring 12 and over 100 Democrats gave a hearty nod to the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. This bill, aimed at regulating payment stablecoins, was signed into law by Trump approximately 24 hours later. The remaining two bills, the Digital Asset Market Clarity (CLARITY) Act and the Anti-CBDC Surveillance State Act, will now proceed to the Senate for review as both chambers prepare for the August recess.

The trio of bills resulted from the Republicans’ “crypto week” initiative, which emphasized the need for regulatory clarity in the digital asset industry. Despite efforts by some Republican lawmakers to portray their efforts as “non-partisan” or bipartisan, most spectators at the GENIUS Act signing were members of their party or Trump allies. Meanwhile, Democrats persist in raising concerns about potential conflicts of interest relating to Trump’s personal crypto ventures in debates over related bills. This suggests that Senate Democrats might still challenge the remaining two bills.

Senate Republicans are anticipated to first address the crypto market structure. This bill would set guidelines for regulators like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and clarify which tokens are considered securities under US law.

On Tuesday, four Republican senators released a discussion draft of their version of a crypto market structure bill, building on the CLARITY Act. The proposed legislation, the Responsible Financial Innovation Act, suggested that the House’s efforts to establish a crypto market structure might have been a trial run for the Senate’s bill.

Regardless of whether the CLARITY Act or the Responsible Financial Innovation Act becomes the final product desired by Republicans, either bill must pass both chambers to land on Trump’s desk. The anti-CBDC bill faces similar hurdles, with only two Democrats in the House supporting it.

In the midst of these discussions, the Senate has yet to vote on the nomination of Brian Quintenz to chair the CFTC. Despite the imminent August recess, the Senate Agriculture Committee plans to vote on Quintenz’s nomination. Meanwhile, the CFTC is still dealing with staffing issues, with only two commissioners currently serving.

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As per Inner City Press, a meeting between the prosecutors and Kwon’s lawyers took place in the US District Court for the Southern District of New York before Judge Paul Engelmayer. The judge indicated his consideration of the GENIUS Act, which could potentially influence the securities fraud charges against Kwon.

The GENIUS Act, an acronym for Guiding and Establishing National Innovation for US Stablecoins, cleared the US Senate on June 17. However, it awaits a possible vote in the House of Representatives before a decision from US President Donald Trump on its enactment.

The legislation, which aims at regulating payment stablecoins, might impact Kwon’s charges related to the TerraUSD (UST) algorithmic stablecoin and LUNA, the platform’s token. In 2022, the UST by Terra significantly deviated from its peg to the dollar, leading to a system-wide crash. This event sparked legal action against Kwon and other executives by authorities in the US and South Korea.

In 2023, Kwon was arrested in Montenegro on unrelated charges. After several court delays, he was extradited to the US in December to stand trial on nine felony counts, including securities fraud, commodities fraud, and more. Kwon has maintained his innocence throughout and is being held without bail. His criminal trial is projected to start in January 2026.

In a separate civil case in 2024, Terraform Labs and Kwon were found guilty of defrauding investors by a jury. Judge Engelmayer is considering if the civil case rulings will have any bearing on Kwon’s ongoing criminal case.

The GENIUS Act, after passing the Senate, is currently under consideration in the House of Representatives. Its companion bill, the STABLE Act, is also under review. These bills may significantly reshape how US financial regulators and authorities approach digital asset-related cases.

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“A convergence of White House support, Republican control of both houses, and crypto-friendly heads of agencies such as the SEC and CFTC have created a ‘perfect storm’, providing a powerful boost for stablecoin regulation to pass this year,” said the Bernstein analysts. They opined that the new administration’s presence in the White House sets the stage for an environment where stablecoin legislation passing in the U.S. Congress becomes increasingly likely, potentially triggering significant engagement from traditional financial services companies.

Despite more economical payment methods for retail debit transactions, the Bernstein analysts believe credit card payments present a valuable opportunity for stablecoin integration. They underscored the potential in cross-border remittances and B2B use cases, pointing out that the existing correspondent banking system, a relic from the 20th century, is plagued by numerous inefficiencies, including high costs, delays, limited data flow, and absence of programmability.

“Stablecoins primarily function as the settlement currency of the crypto economy today – they play a key role in trading pairs on exchanges or lending-based applications on-chain. However, we are noticing emerging use cases beyond crypto in global remittance and cross-border B2B,” explained the Bernstein analysts. They also mentioned that stablecoin issuers are among the largest global holders of U.S. Treasurys at present, a factor they believe will speed up the prioritization of stablecoin regulation at a national level.

“Given that 99% of stablecoins are denominated in U.S. dollars, they bolster dollar dominance in the global on-chain economy. Moreover, the solid foundation of float income economics encourages partnerships with fintechs, leading to a powerful distribution mechanism for stablecoins,” they concluded.

The analysts believe AI agent-driven payments demonstrate potential as a long-term application for stablecoins, though they noted that credit card payment companies already have a robust infrastructure for this purpose.

Disclaimer: This article is for informational purposes only. It is not intended as legal, tax, investment, financial, or other advice. Foresight Ventures, a majority investor in The Block as of November 2023, also invests in other crypto companies. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently, delivering objective, impactful, and timely information about the crypto industry.

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