Congress Approves Groundbreaking Crypto Legislation

The cryptocurrency industry achieved a significant breakthrough in Washington this Thursday, as Congress advanced legislation that would introduce the first federal framework for regulating stablecoins — a widely-used type of digital asset.

The House of Representatives passed the measure, named the Genius Act, with bipartisan support, sending it to the White House for President Trump’s expected signature on Friday. He is poised to sign it into law, making it the first major piece of cryptocurrency legislation enacted in the United States.

However, while the stablecoin regulation marks a notable win for crypto advocates, the outlook for a more comprehensive regulatory overhaul of the digital currency sector remains uncertain. Lawmakers in the House also passed a second bill on Thursday — the Clarity Act — designed to establish clearer market rules for digital assets. The bill now awaits consideration in the Senate, where it is expected to face more challenges.

The Clarity Act includes provisions that would reduce the authority of the Securities and Exchange Commission (SEC) over the cryptocurrency industry, shifting oversight responsibilities instead to the Commodity Futures Trading Commission (CFTC). This change could insulate crypto firms from the type of aggressive regulatory actions the SEC pursued under the Biden administration — actions that included lawsuits against major players like Coinbase and Binance — and place them under a regulator considered more sympathetic to the industry.

“This legislation has been our top priority,” said Kara Calvert, a senior policy executive at Coinbase, the largest U.S. crypto exchange and a frequent target of SEC enforcement.

Representative French Hill, a Republican from Arkansas and chair of the House Financial Services Committee, touted the legislative package as a way to fulfill Trump’s economic vision. “We are reclaiming financial leadership,” he said. “By encouraging capital to return, supporting innovation, and taking the lead in digital payments, we are making America great again in global finance.”

Nevertheless, the bills have drawn sharp criticism from many Democrats, who argue that the new laws cater too heavily to industry interests. Critics claim the proposals essentially allow the crypto industry to write its own rulebook, benefiting wealthy investors — including, they allege, members of President Trump’s family.

Representative Maxine Waters of California, the top Democrat on the Financial Services Committee, criticized the legislation as “an invitation for Trump to profit from policies that could inflict serious harm on consumers and even risk another financial crisis.”

Representative Brad Sherman, another Democrat from California, accused Republicans of “doing the bidding of the crypto bros, including Donald Trump.”

Yet, despite the criticism, a number of moderate and centrist Democrats supported the bills, citing the need for at least some regulatory framework amid the rapid expansion of the crypto market.

“It comes down to whether we’re willing to begin regulating the crypto space or continue to do nothing,” said Representative Angie Craig of Minnesota, the ranking Democrat on the House Agriculture Committee. “This bill ensures that consumers finally receive the same protections that apply in traditional financial markets.”

The strong bipartisan vote underscores the cryptocurrency industry’s growing influence in Washington. Over the 2024 election cycle, crypto firms poured more than $130 million into super PACs backing pro-crypto candidates. Trump, now a vocal crypto supporter himself, has deep financial ties to the digital asset world through ventures that have reportedly enhanced his family’s wealth — a point of discomfort for Democrats who support blockchain innovation but are wary of enriching political opponents.

The bills seemed set for smooth passage earlier this week. However, the process hit turbulence when a faction of conservative Republicans launched a rebellion on the House floor. Their primary concern was a third piece of legislation — one that would prohibit the Federal Reserve from launching a central bank digital currency (CBDC), a move they argue is essential to protect citizens’ privacy.

The CBDC ban eventually passed on Thursday and is now headed to the Senate. But its fate remains murky; to advance, it must garner support from at least seven Senate Democrats, a hurdle that remains uncertain.

In an effort to mollify the conservative dissenters, House Republican leadership pledged to incorporate the CBDC prohibition into the annual defense policy legislation, a high-priority bill typically supported by both parties. Even so, skeptics remain.

“The central bank digital currency ban didn’t happen today,” said Representative Marjorie Taylor Greene of Georgia during an appearance on Steve Bannon’s “War Room” podcast. She warned that a CBDC could enable the government to monitor — and potentially shut down — Americans’ digital wallets. “It gives them total control,” she said. She dismissed the leadership’s compromise, calling it meaningless and voted against the stablecoin bill as one of 12 GOP dissenters.

As for the Clarity Act, its future is far from assured. Senate leaders have indicated that they may draft their own version of a comprehensive market structure bill for crypto, a process that could be prolonged and contentious. Whether Democrats — especially those skeptical of industry self-regulation — would support such a bill remains doubtful.

“It’s a catastrophically flawed piece of legislation that guts our securities laws,” said Hilary Allen, a law professor at American University who has testified before Congress on crypto issues.

Still, Thursday’s flurry of votes signals just how far the industry has come. Dubbed “Crypto Week” on Capitol Hill, the industry flooded lawmakers with lobbying and marketing efforts, plastering Washington bus stops with advertisements and even distributing crypto-themed chocolate bars via vending machines in congressional office buildings.

The legislation’s advancement follows a period of intense legal battles. Under President Biden, the SEC waged a high-profile crackdown, arguing that most cryptocurrencies should be treated as securities — and that platforms offering them were violating the law by doing so without proper registration. Lawsuits were filed against many of the sector’s largest firms.

In response, the industry united. Major crypto players jointly funded a political action committee called Fairshake, alongside two affiliates, which invested heavily in reshaping Congress with pro-crypto voices. Their investment has proven effective, as seen in the accelerated pace of crypto-friendly bills under the Trump administration.

Last month, the Senate gave its blessing to the Genius Act, giving federal legitimacy to stablecoins — digital currencies pegged to the U.S. dollar and used widely for payments and trading. Simultaneously, House legislators unveiled the Clarity Act, seeking to capitalize on the momentum and entrench favorable regulatory frameworks.

One of the Clarity Act’s central goals is to make recent gains permanent. Although the SEC has recently dropped several lawsuits, future administrations could easily resume enforcement. Industry leaders are pushing to ensure that risk is permanently neutralized.

“If the Clarity Act passes,” said Amanda Fischer, a former senior SEC official under Biden, “it would likely prevent the SEC from prosecuting past misconduct. In essence, it would retroactively bless the industry’s prior behavior.”

While crypto regulation remains a deeply polarizing issue in American politics, one thing is clear: the digital asset industry is no longer on the sidelines in Washington. Its money, lobbying, and now legislation are shaping the future of financial innovation in the U.S.