Don't Celebrate 'Crypto Week' Yet — Barrons.com

By Bill Alpert

The House of Representatives passed three major cryptocurrency bills on Thursday, capping what President Donald Trump had dubbed "Crypto Week." But it will be a long time before they take effect.

The three bills mark important steps toward regulating this evolving medium of exchange and a victory for the intense lobbying by crypto players like the trading platform Coinbase Global to win over politicians like Trump — who went from a Bitcoin skeptic, to a crypto profiteer after taking millions of dollars in crypto-tied campaign contributions and launching several of his own digital-assets ventures.

The price of Bitcoin rose to record levels ahead of the legislative week, and other crypto coins like Ethereum and XRP jumped after the votes. Shares of Coinbase and Robinhood Markets also rose. IPO plans were announced by crypto exchange-traded fund sponsor Grayscale Investments and the crypto exchange operator Bullish.

But it could take over a year for the legislation to take force, notes TD Securities analyst Jaret Seiberg.

The bills passing the House on Thursday were the Genius Act, the Digital Asset Market Clarity Act, and the Anti-CBDC Surveillance State Act.

Only the Genius Act has also passed the Senate, and Trump signed it on Friday. It establishes a framework for federal regulation of so-called payment stable coins, whose prices are pegged to a real currency like the dollar. The bill requires issuers to maintain one to one reserves in U.S. dollars or Treasuries.

Treasury Secretary Scott Bessent argued that the law could create $3.7 trillion in additional demand for T-bills. Raymond James analyst Ed Mills noted Friday that others are far less optimistic about the resulting demand for Treasuries.

Despite Trump signing the Genius Act into law, there will be no Day One impacts on stable coin issuers like Circle internet Group or Tether, says TD's Seiberg. Within a year, the Treasury Department is supposed to write rules on how an entity becomes qualified to issue stable coins, as well as how stable coins pegged to foreign currencies will be permitted to issue in the U.S. Under administrative law, there will be a round of public comments on the proposed rules — and perhaps litigation.

And it will be a full three years before the prohibition of stable coins that don't comply with the new law. "This is the start of the process, and not the finish line," Seiberg says.

Perhaps more important to the crypto industry's thriving is the Clarity Act, which apportions crypto oversight of crypto exchanges, brokers, and tokens between the Commodity Futures Trading Commission and the Securities and Exchange Commission.

The Clarity bill must now go the Senate, which has to pass its own version of the law. The House bill had good bipartisan support, so the Senate might get its part done before the Aug. 1 recess. If they do, a final law might be ready for the president's signature in September.

The last of the three crypto bills — the Anti-CBDC Act — prohibits the Federal Reserve from issuing a central bank digital currency, a "CBDC." Propelling it was the crypto industry's ostensible worry about surveillance and privacy, but perhaps some worry about government competition with their businesses.

The Anti-CBDC bill passed more narrowly than the others, and sponsors had to attach it to a national defense bill. Senate passage will entail lengthy negotiations, says Raymond James' Mills, and could stretch until December.

Along with Trump's well-publicized signing of the Genius Act, the government's crypto campaign will get another nudge on Tuesday, when a president's working group makes policy recommendations that could include a proposal for a strategic reserve of Bitcoin.

It has been a strong start. But just the start.

Write to Bill Alpert at william.alpert@barrons.com

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