On Tuesday, the U.S. Senate passed the GENIUS Act (S. 394), which would establish a comprehensive federal framework for U.S. dollar-denominated stablecoins.
Now, I know some of you are rolling your eyes because Bitcoin Magazine is covering a stablecoin bill.
To you, I have two things to say:
Firstly, you should still pay attention to crypto bills like the GENIUS Act, because they could impact your ability to use bitcoin privately.
Secondly, the GENIUS Act might get combined with the CLARITY Act (also referred to as the “market structure” bill), which would protect developers and providers of noncustodial Bitcoin tools and services.
With that out of the way… One day after the bill passed the Senate, President Trump posted a message on Truth Social urging the members of the U.S. House of Representatives to pass the act without amending it.
However, some House leaders quickly began pushing to package the GENIUS Act with a version of the CLARITY Act.
Senator Hagerty stated on the Bankless podcast on Wednesday that he thought combining the GENIUS Act with the CLARITY Act would hurt the chances of the GENIUS Act passing.
“If the House of Representatives sends back something that’s different [than the version of the bill that passed the Senate], then that’s going to give those who are already opponents of the bill the opportunity to say ‘Well, we tried — we gave you our vote, but you changed it on us,’ and we’re going to be right back to square one,” he added.
(In the U.S. legislative process, if an amendment to a bill is made in the House of Representatives after it passes the Senate, it must be sent back to the Senate to be voted on again, where it needs 60 out of 100 votes to pass.)
The senator added that the CLARITY Act still needs to be shaped up before it’s voted on in the Senate.
“We have great momentum with this bill, but it’s going to take some time,” said Senator Hagerty.
“There’s a divide in terms of understanding the technology, where there may be more people who understand it [and who] are comfortable with it in the House of Representatives,” he added.
“We’ve got more work to do here in the Senate for some of the aspects of the market structure bill that are going to require more education.”
Head of Firmwide Research at Galaxy Digital Alex Thorn is of the same mind as Senator Hagerty in that he feels merging the GENIUS Act with the CLARITY Act is a bad idea.
“GENIUS represents months of bipartisan negotiation that led to landslide bipartisan passage in the Senate — 68-30, with 18 Democrats voting in favor,” said Thorn.
“There’s no guarantee the Senate outcome would look similar in a combined version. In fact, it’s unlikely,” he added.
Thorn also echoed Senator Hagerty’s sentiment as he added that “market structure is extremely complex” and that it will take some time to iron out some of the details in the bill.
He also noted that “Democrats have been demanding that a provision addressing the Trump family’s crypto ventures be added to market structure.”
“If such a provision is not added, market structure will have a very tough time getting to 60 votes in the Senate,” said Thorn. “The House should pass a clean GENIUS Act now and then turn to the task of crypto market structure.”
Head of Policy at the Bitcoin Policy Institute Zack Shapiro also sees the value in getting the GENIUS Act across the finish line without adding the CLARITY Act to it.
“The GENIUS Act is seen as bipartisan and not controversial,” Shapiro told Bitcoin Magazine. “The CLARITY Act might be more controversial or more of a political lift, and [it could] really put both of [the bills] at risk if they’re tied together.”
With that said, Shapiro understands why Bitcoin enthusiasts who don’t care much about stablecoin legislation might want to see the CLARITY Act worked into the GENIUS Act.
“If you are taking a Bitcoin-only lens, and that’s literally the only thing you care about, then maybe the answer is you do tie these together because you don’t really care about the GENIUS Act,” explained Shapiro.
“In many ways it would be great to get them both done and not leave the CLARITY Act hanging — especially with the BRCA protections that are in Section 110.”
The language in Section 110 in the CLARITY Act was taken from the Blockchain Regulatory Certainty Act (BRCA), and it protects developers and service providers of noncustodial Bitcoin and crypto technology.
Speaking more objectively, though, Shapiro remained in favor of keeping the two bills separate.
“I expect the CLARITY Act to be a much bigger political lift than just passing [it in a] version of the GENIUS Act,” he said. “And if we don’t get any crypto bills passed, then there’s just not going to be an appetite to do this in the future.”
