Crypto Industry Nears a Victory as Congress Prepares to Pass Stablecoin Bill — Barrons.com

By Joe Light and Elsa Ohlen

The crypto industry is on the cusp a major victory, securing legislation that could lead to digital assets becoming a significant part of Americans' everyday lives. But delays in enacting the bill shows the industry's power still has limits.

On Thursday afternoon, the House of Representatives, after a long stall, is expected to pass a bill that would set rules for so-called stablecoins, a type of cryptocurrency whose value is most often pegged to the dollar and backed by reserves. The Senate already passed the bill in June, and President Donald Trump is expected to swiftly sign the bill into law.

The bill, called the Genius Act, has been a longstanding target for stablecoin company Circle Internet Group and crypto trading platform Coinbase Global. Its passage would be the culmination of a multiyear effort to lobby lawmakers over to crypto's cause — and to finance the campaigns of others who promised to support the industry.

Crypto supporters largely agree that, if passed similarly to their current form, these bills could transform the sector and allow for more investments, especially from institutions.

Bitcoin's price was flat over the past 24 hours as of midday Thursday at about $118,800. Several large altcoins were soaring. Ether jumped 5.4% and XRP climbed 9.6%. Solana rose 2.5%, while memecoin Dogecoin rose 5.5%.

Over the past seven days, Ether and XRP have gained 23% and 33%, respectively. Bitcoin has climbed 6.4%.

There's no better illustration of the crypto industry's lobbying success than Trump himself. He was an outspoken Bitcoin skeptic during his last presidency but has since taken millions of dollars in crypto-tied campaign contributions, launched several of his own digital-assets ventures, and said he has the goal of making the U.S. the crypto capital of the world.

The crypto industry still has much it wants to accomplish even after Thursday's expected victory. High on crypto boosters' wish list is legislation to establish rules for crypto exchanges, brokers and tokens. But it will be more difficult for the industry to build the coalition it needs to push through that larger agenda.

On Thursday, the House is also expected to pass a bill to establish those other rules. But unlike the stablecoin bill, the Senate has yet to vote on market-structure legislation.

The Senate seems a long ways away from building the bipartisan support needed to avoid a filibuster and move it into law, wrote TD Cowen analyst Jaret Seiberg in a research note this week.

"Passing this bill is symbolically important, but what will matter is the language that the Senate can pass," Seiberg said.

Seiberg said he doesn't expect to get full details on what the Senate plans until late this year or early next year.

Part of the hangup is that while several senators for years have pushed digital-assets tied legislation, the Senate and its committees as a whole haven't done nearly as much work building a consensus as their counterparts in the House. Former Sen. Sherrod Brown (D., Ohio), who chaired the Senate Banking Committee, was a crypto skeptic, and he and other progressive Democrats largely froze bills moving forward even as the Republican-led House forged ahead.

The second hang-up is substantive. Some Democratic senators, including Sen. Elizabeth Warren (D., Mass.), have argued that the crypto bills would let the industry run roughshod over investor protection laws and leave enforcement to undermanned agencies like the Commodity Futures Trading Commission not used to policing a large industry. They say that current investor laws that pertain to securities are already good enough.

Not helping matters is Trump's own crypto ventures. The stablecoin bill itself almost faltered in the Senate after Democrats expressed concerns that it didn't prohibit Trump or other government officials from profiting from the coins .

The Trump family owns an interest in crypto firm World Liberty Financial. Its token sales generated more than $57 million for the president, according to an ethics disclosure, and the firm this year launched its own stablecoin. Some Democrats will no doubt push for restrictions on Trump profiting off crypto in a new bill.

New Senate Banking Chairman Tim Scott (R., S.C.) last week began to hold hearings on potential crypto-related legislation, but it could take months to write a bill that gets the seven Democratic votes needed to surmount a filibuster.

Thursday will be a landmark vote for the crypto industry, but the more important victories will take time.

Write to Joe Light at joe.light@barrons.com and Elsa Ohlen at elsa.ohlen@barrons.com

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