The day before the official start of "Crypto Week" in Congress, the price of Bitcoin (BTC 0.08%) hit a new all-time high of more than $123,000. That tells you all you need to know about how much market participants are anticipating the arrival of new crypto legislation.
The U.S. House of Representatives will deliberate on two key pieces of legislation during Crypto Week: the Genius Act and the Clarity Act. Here's what you need to know.
Legitimacy for stablecoins
Let's start with the Genius (Guiding and Establishing National Innovation for U.S. Stablecoins) Act, which recently passed through the Senate, and is close to making its way to the White House for a final signature from President Donald Trump. The goal of the legislation is simple: to spell out the rules of the road for stablecoins.
Stablecoins are cryptocurrencies pegged 1:1 to a fiat currency, like the U.S. dollar, and are sometimes referred to as digital dollars. They have surged in popularity, and are now a $250 billion industry. They are growing so quickly that Treasury Secretary Scott Bessent thinks they might be a $2 trillion industry within just a few years.
Image source: Getty Images.
The problem is that, until now, there were no clear rules for who can issue them, who can invest in them, and how they must be collateralized. Once the Genius Act gets approved by the House and these details are ironed out, the list of private-sector companies looking to issue their own dollar-backed stablecoins will likely skyrocket. Already, Amazon and Walmart are among the companies reportedly exploring new stablecoin launches.
Boost in institutional demand for cryptocurrencies
The second major piece of legislation under consideration this week is the Digital Asset Market Clarity Act, better known as the Clarity Act. As the name suggests, it will provide transparency about what types of digital assets can be created, who can buy them, and how they will be regulated. This type of legislation is typically referred to as market structure regulation, and its closest analogue is the new Mica (Markets in Crypto-Assets) regulation in Europe.
As it stands now, it looks like there will be two primary crypto regulators. In addition to the SEC, which has been the de facto regulator until now, there will also be the Commodity Futures Trading Commission. This is very important, because the SEC has historically taken a very skeptical view of cryptocurrencies. Further changes in the SEC's focus under the Trump administration now look like a near certainty, and that means a more hands-off approach to crypto.
In theory, the Clarity Act should boost institutional demand for all digital assets, and not just Bitcoin. Publicly traded companies won't have to be as worried about adding digital assets to their balance sheet, and asset management firms will be far more likely to offer Bitcoin and other crypto-related products to their clients.
Unlike the Genius Act, however, the Senate has not yet come up with its own version of the legislation. Plans are to have a Senate version ready by the end of Crypto Week, but a final signature from Trump won't come until September at the earliest. That's because Congress is just days away from its summer recess, and there probably won't be enough time to get everything done by August.
Merger of traditional finance with crypto finance
The big picture here is that the Genius Act, combined with the Clarity Act, will result in a merger of traditional finance with decentralized finance (DeFi). As a result, retail investors should see an explosion of new financial products featuring Bitcoin and other cryptocurrencies, including new crypto lending products.
If that happens, then DeFi could once again become a hot new buzzword, much like it was during the previous crypto bull market rally, when Ethereum skyrocketed to prominence. This time around, Wall Street is fully behind the growth of DeFi. And, in some cases, it is actually leading the charge, especially when it comes to tokenization (the transformation of real-world assets into digital assets on the blockchain).
Don't forget about tariffs
All of this, of course, should be incredibly bullish for the crypto market in the second half of 2025. If the recent price behavior of Bitcoin is any indication, there will be gains in most cryptocurrencies as we head into the fall.
But don't forget about tariffs. Crypto Week comes amid a backdrop of higher tariffs levied against the likes of Canada, Mexico, Brazil, and the European Union. The tariff deadlines keep getting pushed back, but at some point, the rubber is going to hit the road.
So, before you jump headfirst into the crypto pool this summer, make sure you understand the risks involved. For new crypto legislation to be a real game-changer, Congress first needs to clear up the situation surrounding tariffs and global trade.
