Prominent crypto legal advocate John E. Deaton, known for his vocal support of XRP and his role in its legal battle with the SEC, has issued a stark warning: if the GENIUS Act — a bipartisan bill aimed at regulating stablecoins — doesn’t make it through the U.S. Senate, meaningful crypto legislation might be shelved until the end of the decade.
Deaton’s concern centers around the political climate and legislative gridlock in Washington. He argues that if lawmakers can’t even pass a relatively simple and widely supported stablecoin bill, there’s little hope for more comprehensive reforms in the near future. “If this can’t get done, nothing else will,” Deaton posted to X (formerly Twitter). He added that failure to pass the bill could delay crucial updates to crypto market structure, tax frameworks, and consumer protections until after 2028 — likely pushing meaningful crypto legislation into 2029.
What the GENIUS Act Proposes
The GENIUS Act — short for “Guaranteed and Enforceable National Issuance of United States Stablecoins” — is spearheaded by Senator Bill Hagerty. At its core, the bill seeks to bring clarity to the stablecoin landscape by mandating high-quality reserve backing and regulatory oversight for issuers operating in the U.S.
Senator Hagerty appeared on CNBC’s Squawk Box, where he argued that the lack of clear regulations is driving innovation offshore. “This bill will offer clarity and ensure stablecoins backed by the dollar remain a pillar of the global financial system,” he said. Hagerty also criticized the reliance on enforcement actions from regulators like the SEC, saying they’ve contributed to industry uncertainty and discouraged investment.
He believes the GENIUS Act would not only provide guardrails for the emerging stablecoin industry but also foster innovation within U.S. borders rather than pushing startups abroad due to unclear rules.
Industry Voices Join the Chorus
The proposed legislation has earned vocal support from major figures in the crypto space. Faryar Shirzad, Chief Policy Officer at Coinbase, emphasized that stablecoin legislation isn’t just about crypto — it’s a strategic move to preserve the dollar’s dominance. “The U.S. needs to lead in blockchain finance, and stablecoins are a big part of that,” Shirzad said. He compared the current moment to the rise of money market funds in the 1970s, arguing that the financial system has successfully adapted to disruption before and can do so again.
In his view, the GENIUS Act could help position the U.S. at the forefront of financial innovation, strengthening both its economic influence and national security. He described the bill as more than a regulatory formality — it’s a cornerstone of future monetary strategy.
Political Headwinds Could Stall Progress
Despite bipartisan support, the bill isn’t without its critics. Lawmakers like Senator Elizabeth Warren have expressed concerns about loosening controls over financial products that could pose systemic risks. Critics fear the bill might inadvertently reduce the oversight authority of key regulators, leaving room for exploitation.
John Deaton also noted a weakness in the bill: it does not allow stablecoin holders to earn yield, a feature that would make these assets more competitive with traditional banking products. He acknowledged, however, that such a provision would likely draw heavy opposition from banking lobbies, which are wary of losing deposit market share.
“The bank lobby is very real,” Deaton posted, acknowledging the political tightrope that lawmakers must walk.
What’s at Stake
The Senate is expected to vote on the GENIUS Act soon, but the outcome remains uncertain. Should it fail, the ripple effects could be profound. According to Deaton, without stablecoin legislation in place, broader reforms — including the Lummis-Gillibrand Responsible Financial Innovation Act and other crypto tax initiatives — will likely remain stalled until a new administration takes office.
For now, the crypto industry watches with bated breath. The GENIUS Act could be a litmus test for whether Congress is ready to engage seriously with digital asset legislation — or if it will continue kicking the can down the road, leaving crypto stuck in a regulatory gray zone for years to come.
