Trumps crypto czar David Sacks says stablecoin bill is going to pass

Stablecoin Bill Gains Momentum Amidst Crypto Regulation Discussions

The crypto world is buzzing as a bill designed to regulate stablecoins in the U.S. gains traction. According to a recent CNBC report, David Sacks, a key advisor to President Trump on crypto and AI, believes the stablecoin bill is likely to pass the Senate with bipartisan support. This development arrives even as discussions around crypto regulation continue to evolve.

GENIUS Act: A Step Towards Clear Crypto Regulation

The proposed legislation, known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, represents a significant effort to create a clear legal framework for stablecoins pegged to the U.S. dollar. Sacks suggests that if the bill passes, it could unlock trillions of dollars in demand for U.S. Treasurys by fostering growth in the stablecoin market under well-defined rules.

Currently, over $200 billion in stablecoins exist, but the market remains largely unregulated. Legal clarity, according to Sacks, could stimulate substantial demand for Treasurys almost immediately.

Controversy and Progress

The stablecoin bill’s advancement occurs despite ongoing discussions surrounding the Trump family’s involvement in the crypto space. Concerns have been raised about potential conflicts of interest, particularly regarding the family’s ties to World Liberty Financial, a crypto firm that recently launched its stablecoin, USD1. This token is backed by U.S. Treasurys and dollar deposits and has secured a $2 billion investment commitment from Abu Dhabi’s MGX fund via Binance.

While Sacks has disclosed the sale of $200 million in crypto-related holdings before joining the White House, he declined to comment on whether the president or his family might financially benefit from the bill’s passage.

Despite the momentum, the bill’s final approval isn’t guaranteed. Senator Josh Hawley has introduced a controversial provision to cap credit card late fees, potentially jeopardizing support from financial industry allies.

Banking Industry Concerns

Austin Campbell, a professor at New York University, noted in a May 21 post that the U.S. banking sector is increasingly worried about the rise of yield-bearing stablecoins, which pose a threat to their established profit models.

Campbell argues that banks fear stablecoins could disrupt their fractional reserve practices, which allow them to profit while offering low returns to depositors. The SEC approved the first yield-bearing stablecoin security by Figure Markets in February. Pendle reported on May 21 that yield-bearing stablecoins have surged to $11 billion in circulation since January 2024, representing 4.5% of the total stablecoin market.

Conclusion

The stablecoin bill’s journey through the Senate is marked by both progress and controversy. While it aims to provide much-needed regulatory clarity to the crypto market, concerns about potential conflicts of interest and opposition from the traditional banking sector remain. The outcome of this bill could significantly impact the future of stablecoins and the broader crypto landscape.