The GENIUS Act, a proposed federal framework to regulate stablecoins in the United States that the Senate passed on Tuesday, is facing criticism from legacy media outlets and segments of the fintech industry.
Champions of the bill argue that it offers clarity and consumer protections for digital dollar equivalents, but naysayers see it as an “economic risk” to the US economy.
In a July 17 opinion piece, The New York Times coined the GENIUS Act a “chaotic piece of legislation,” warning that its passage could destabilize the financial system. The publication compared stablecoins to the “free banking era” of the 1800s, claiming the outcome of using the digital assets will be just as disastrous.
The article cited Treasury Secretary Scott Bessent’s testimony before Congress, in which he said stablecoin issuers could soon hold upwards of $2 trillion in US Treasury securities.Â
“If panicked customers force them to sell these securities, treasury prices could collapse, sharply increasing interest rates and destabilizing other financial markets and our entire economy,” it read.
ConsenSys counsel: GENIUS Act under attackÂ
In a detailed post published on X on Wednesday, William Hughes, senior counsel and director of global regulatory matters at blockchain firm ConsenSys, challenged NYT’s analogy between modern stablecoins and 19th-century bank notes. He propounded that the comparison lacks nuance and ignores major differences in technological infrastructure, regulatory oversight, and market dynamics.
GENIUS Act under attack in the @nytimes
Presupposition: orange man bad. (this doesn't drive the argument but is central to its intended rhetorical appeal. or so it seems. now with that out of the way)
The claim: Stablecoins are analogous to the free banking era of the… https://t.co/Au1BJoDUIU
— Bill Hughes 🦊 (@BillHughesDC) June 18, 2025
According to Hughes, free banking era (FBA) notes were often limited in use to specific localities, with limited interoperability and difficult-to-monitor demand.Â
“Their use in commerce was strictly limited to those businesses, largely local, that would accept them,” Hughes wrote.
In contrast, stablecoins are exchangeable through both centralized exchanges and decentralized finance platforms, with demand data available in real time on hundreds of public tracking systems.
“FBA demand was difficult to perceive and regionally fragmented,” the lawyer noted. “Stablecoins, however, have global demand, especially among those without access to US dollars. Demand dynamics are constantly broadcast across data platforms.”
Hughes also mentioned that the 1800s FBA era had a jurisdiction-by-jurisdiction approach, sometimes with no oversight at all. He made a point that stablecoins are subject to a body of federal and state regulations, alongside the GENIUS Act’s proposed framework.
“Granted, I’m not a fancy professor at a fancy college,” Hughes continued, “but I’m a little skeptical that the free banking era really is compelling evidence that stablecoins will bring us pain and sorrow. We should see the bill get to the President’s desk before summer is out. Then we’ll see if these critics’ prognostications of doom and financial ruin will play out.”
Consumer protections and rationale in new legislation questioned
Some industry voices are defending the GENIUS Act, but others, like Geeq.io CEO Stephanie So, believe it has gaps on the consumer protection front. In an X post, she said any regulation of stablecoins must require coins to be fully backed, including proof of reserves on both centralized and decentralized markets, with legal recourse for users.
“Consumers need proof of what they own and a clear path to resolution if something goes wrong,” So warned that without those protections, stablecoins could put individual users at risk.
These necessary changes are moving into the realm of feasibility because @GeeqOfficial's L0 protocol
cannot be manipulated.That is the infrastructure that true
consumer protections need.EVERYTHING ELSE is politics. Yes, words matter.
Actions speak louder.
Call me to…— Stephanie So (@ComplicatedIsOK) June 17, 2025
Jack Zhang, co-founder and CEO of global fintech platform Airwallex, has shared his doubts about the effectiveness of stablecoins in cross-border payment systems, particularly between developed economies.
In a June 7 thread on X, Zhang argued that for business-to-business transactions in G10 currencies, stablecoins have no clear advantage over existing solutions. He explained that platforms like Airwallex already provide virtually zero-cost, real-time settlement for international transactions.
