On Feb. 4, a bipartisan group of U.S. senators introduced the Guiding and Establishing National Innovation for U.S. Stablecoins, Genius Act. Earlier this week, the United States Senate voted to move forward on this important piece of legislation. If passed out of Congress and then signed by President Donald Trump into law, it will benefit all Americans. 

By this procedural vote, the Senate also demonstrated that important legislation can be passed when members of Congress compromise on competing interests. The 66-32 procedural vote was necessary to overcome the Senate filibuster rule, which requires 60 votes for passage. There is no filibuster rule in the House of Representatives.

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The act aims to establish a regulatory framework for stablecoins, digital currencies pegged to so-called fiat currencies, a currency issued and backed by a nation-state. The U.S. dollar is a fiat currency. Stablecoins are 100% backed by the U.S. dollar or by a near-dollar instrument such as Treasury bills issued by the U.S. Treasury. A Stablecoin will only fluctuate in value to the extent the U.S. dollar changes in value relative to the currencies of other countries. A Stablecoin is not like Bitcoin, which is highly volatile. 

A Stablecoin could also be backed by the currencies of other nations. In theory, a stablecoin could be backed by the Euro of the European Monetary Union or by the Yen of Japan. To repeat, a stablecoin is fully backed by a national currency. Again, stablecoins are digital assets, but they are not highly volatile cryptocurrencies. 

Stablecoins will be regulated by the federal government, but each individual will own and control the stablecoins they purchase. Transactions are routed through the blockchain digital network, which cannot be hacked. Transactions are not routed through the federal government or through financial intermediaries such as banks or credit card companies. After the Senate passes the bill, passage in the House should be a formality. The legislation enjoys bipartisan support.

The legislation will bring the U.S. closer to the day when commercial transactions are undertaken with digital currencies, in the case of the U.S., with digital dollars. Consumers and merchants will no longer have to use or accept physical dollars or credit cards. A consumer will be able to pay for goods and services with a stablecoin, a digital dollar. Banks and credit card companies opposed the legislation because they would lose billions of dollars in fee income when consumers complete a transaction without going through a financial intermediary. Card swipe fees totaled $187 billion last year. 

But the key benefit of stablecoins is that friction from the economic system will be removed and, at the margin, the U.S. economy will be more productive. Consumers will benefit. Moreover, the autonomy of the individual will be enhanced. Stablecoins are held and transactions are conducted outside of the purview of the federal government or any financial institution.

In addition, through stablecoin payments, consumers will be able to engage in cross-border transactions more easily and efficiently. Costly currency transaction fees will be reduced. And of course, households will be able to transfer U.S. dollars seamlessly to overseas individuals. Stablecoins are increasingly popular. Total transactions reached a nominal value of $27 trillion in 2024, surpassing the combined volume of Visa and Mastercard transactions in 2024. Clearly, stablecoins are embedded in the global economy.

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By this legislation, the U.S. will stay at the forefront of technological innovation.

Moreover, because the U.S. dollar is the global reserve currency and is involved in almost 90% of foreign exchange transactions, the Genius Act will encourage global use of U.S. stablecoins. The dollar’s status as the global reserve currency will be enhanced. A strong dollar is in the national interest.

James Rogan is a former U.S. foreign service officer who has worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society. He can be followed on X here. He can be reached at [email protected]