The GENIUS Act Sparks Debate Over Stablecoin CBDC Concerns

On July 18, 2025, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act, into law, marking a significant step in regulating privately issued payment stablecoins in the United States. The legislation, passed by the House of Representatives on July 17 following Senate approval in June, establishes a robust framework for digital assets pegged to fiat currencies like the U.S. dollar, aiming to ensure stability, transparency, and consumer protection. The act mandates that stablecoin issuers maintain one-to-one reserves with high-quality assets, adhere to strict oversight, and comply with anti-money laundering (AML) and know-your-customer (KYC) requirements. However, the bill has ignited controversy, with critics like republican Representative Marjorie Taylor Greene warning that it could indirectly pave the way for government-controlled digital currencies despite its focus on private stablecoins.

The GENIUS Act requires U.S.-based issuers, or registered foreign issuers under equivalent regulatory regimes, to back stablecoins with assets such as U.S. dollars, insured bank deposits, or short-term U.S. Treasuries. Issuers such as Circle or Tether must provide monthly disclosures and undergo audits to ensure transparency, with larger issuers exceeding $10 billion in circulation facing federal supervision from agencies like the Federal Reserve, FDIC, or OCC. Non-compliance can lead to penalties, suspensions, or cease-and-desist orders, aligning stablecoin issuers with the regulatory rigor of traditional financial institutions. Proponents argue this framework strengthens the U.S. dollar’s global dominance by fostering trust in digital assets, preventing collapses like those seen in past crypto failures, and curbing illicit activities.

Concerns Over CBDC Risks and Legislative Promises

While the GENIUS Act explicitly excludes central bank digital currencies from its scope, focusing solely on privately issued stablecoins, critics like Greene argue it creates infrastructure that could enable future government overreach. She has called the bill a potential “Trojan horse” for CBDCs, warning that its regulatory ecosystem, including mandatory transaction surveillance and asset control mechanisms, could facilitate government monitoring or account freezes similar to actions seen during Canada’s 2022 Freedom Convoy protests.

Greene’s concerns are rooted in the bill’s requirements for issuers to comply with federal mandates, such as court orders or sanctions from the Office of Foreign Assets Control, which could compel stablecoin providers to surveil, restrict, or freeze user transactions. She fears this sets the stage for a cashless economy where centralized control could emerge, especially if future administrations reverse existing protections like President Trump’s January 2025 executive order banning federal agencies from promoting CBDCs.

Greene’s opposition intensified due to procedural frustrations during the bill’s passage. She claims House Speaker Mike Johnson promised to include a CBDC ban in the legislation, but the bill was brought under a closed rule, preventing amendments on the House floor. This left no opportunity to integrate a statutory ban, which Greene and a small group of Republicans demanded as a safeguard against government-controlled digital currencies. While the Anti-CBDC Surveillance State Act, passed by the House on the same day, seeks to prohibit the Federal Reserve from issuing a CBDC without congressional approval, its fate in the Senate remains uncertain, with Greene citing insufficient votes for passage.

The absence of a CBDC ban in the GENIUS Act has fueled distrust among critics who view the legislation as incomplete without explicit protections. Greene has expressed skepticism about future efforts to secure a ban, suggesting that if it cannot pass now, prospects in bills like the National Defense Authorization Act (NDAA) are dim. Supporters of the GENIUS Act, including President Trump, counter that it promotes private sector innovation and strengthens financial systems without authorizing CBDCs. They emphasize that the bill’s focus on reserve-backed stablecoins and transparency measures ensures consumer safety and global competitiveness.

The debate highlights broader tensions in the crypto space, balancing innovation with concerns over privacy and control. For now, the GENIUS Act positions the U.S. as a leader in stablecoin regulation, but critics remain wary of stablecoins long-term impact on financial freedom.