"Hagerty's GENIUS Act: US Stablecoins Get Federal Reserve Rules"

US Senator Bill Hagerty has introduced the "Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act," a bill aimed at creating a regulatory framework for stablecoins. The legislation seeks to bring tokens such as Tether and USD Coin under Federal Reserve rules, fostering a "safe and pro-growth regulatory framework that will unleash innovation" and advance President Donald Trump's pledge to make the US the "world capital of crypto."

The GENIUS stablecoin bill defines stablecoins as digital assets pegged to the US dollar. It proposes that issuers with market caps above $10 billion comply with Federal Reserve regulations, while issuers below that threshold would be regulated by the states. Currently, only Tether (USDT) and Circle's USD Coin (USDC) have market caps above $10 billion, according to CoinGecko data.

Stablecoin issuers would also have to provide audited reserve reports every month, with submitting false information potentially leading to criminal penalties. The bill builds on the discussion draft submitted by Hagerty for former Representative Patrick McHenry's Clarity for Payment Stablecoins Act in October.

Hagerty's stablecoin bill has received support from Senators Tim Scott, Kirsten Gillibrand, and Cynthia Lummis. The senator has expressed his eagerness to work with Representative French Hill and the House Financial Services Committee to "get it to the president's desk and signed into law."

At a Feb. 4 press conference, the White House's AI and crypto czar, David Sachs, showed real intent to help pass stablecoin legislation in the coming months. Sachs stated that stablecoins have the potential to "ensure American dollar dominance internationally, increase the usage of the US dollar digitally as the world's reserve currency, and in the process create potentially trillions of dollars of demand for the US Treasury."

The total stablecoin market cap currently sits at $227 billion, a sum that crypto asset manager Bitwise expects to grow significantly by the end of this year.