3 Ways Trump Signing the GENIUS Act Could Impact the Price of Crypto
Written by
T. Woods
Edited by
Jenna Klaverweiden
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On July 18, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law. As noted by CoinDesk, the GENUIS Act is the first significant legislation for cryptocurrency in the United States.
So what does this new legislation mean for cryptocurrency prices?
What Does the GENIUS Act Do for Crypto?
Rob Nolan, a Duane Morris partner, defined the GENIUS Act to The Hill as the “first step of the U.S. government really regulating cryptocurrency.” The law pertains primarily to one kind of cryptocurrency, stablecoins, which are designed to keep a stable valuation by being pegged reliable assets, like the U.S. dollar or even gold.
The GENIUS Act regulates who can issue the dollar-pegged stablecoins with federal oversight, ensuring that issuers have equal backing in liquid assets to their stablecoin values. Issuers must also perform regular public disclosures so that their holdings can be audited. Further, the act creates an interrelated framework of state-level and federal-level regulatory bodies to provide oversight for stablecoin transactions.
While the law is only a few days old, it could impact the crypto market in multiple ways. Here are just a few means by which Trump signing the GENIUS Act could impact the price of crypto.
Stablecoins Are Up
According to AInvest, the signing of the act “catalyzed a dramatic surge in market activity.” It noted that the stablecoin market capitalization has grown by $4 billion.
The GENIUS Act has not only provided what is seen as a governmental validation of stablecoins and crypto in general but also has allowed more crypto capital to flood the market in the form of newly regulated stablecoins.
They Could Continue To Rise
Now that stablecoins are validated with government regulation, more and more banks and various payment platforms can integrate stablecoins into the world of finance, which could further validate crypto and increase value.
Fidelity noted that widespread adoption could lead to more usage of blockchain networks on which stablecoins would be built, which could “be beneficial for the long-term value of these blockchains’ cryptocurrencies.”
Per AInvest, Bank of America, JPMorgan and Citigroup have already announced stablecoin plans. They’re planning to either launch or invest in stablecoin ventures, it reported.
Prices Could Still Fall
While many view the GENIUS Act as a positive for the crypto market, there are critics who claim it compromises the decentralization of crypto, per CNBC. Now that stablecoins are far more regulated, they could be less appealing to certain investors.
Additionally, as Fidelity noted, crypto prices could still fall. “Regulations may reduce the probability of fraud and malpractice, but they can’t protect a portfolio against negative market sentiment,” it said.
Its broader impact on crypto remains murky and is likely dependent upon how the larger crypto world will take to this heightened form of regulation.
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