GENIUS Act Revised: New Rules for Overseas Stablecoins

Senator Bill Hagerty, along with co-sponsors Senators Tim Scott, Cynthia Lummis, and Kirsten Gillibrand, has introduced an updated version of the GENIUS Act, a bipartisan legislation aimed at establishing a regulatory framework for stablecoins in the United States. The revised bill incorporates feedback from a broad range of industry participants and includes several key modifications to enhance and advance the regulatory framework for stablecoins.

Senator Hagerty emphasized the potential of strong stablecoin innovation, which ranges from improving transaction efficiency to increasing demand for US Treasuries. He stated, “My legislation establishes a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto.”

The most notable update in the revised GENIUS Act is the expansion of “Reciprocity for Payment Stablecoins Issued in Overseas Jurisdictions.” The original bill addressed cross-border stablecoin issuance, but the new version broadens this section to include specific requirements for overseas stablecoins. It requires the Secretary of the Treasury to establish reciprocal arrangements with countries that have similar regulatory frameworks. These arrangements cover reserve requirements, supervision, anti-money laundering, sanctions compliance, and liquidity standards. The goal is to improve international transactions and interoperability with US dollar-denominated stablecoins, with a two-year deadline set for completing these agreements.

The updated GENIUS Act also expands the definition of a “Comptroller-regulated entity” to include both Federal qualified nonbank payment stablecoin issuers and any organization authorized by the Comptroller. Additionally, the bill includes new rules for issuers regarding blocking transactions and following legal orders. The Secretary of the Treasury must work with issuers before blocking transactions involving the property of a foreign person, although the Secretary does not need to notify the issuer before taking action. Issuers must have the technology needed to follow legal orders, including the ability to freeze, seize, or stop the transfer of stablecoins if required by law. Issuers cannot offer or trade foreign stablecoins in the US unless they meet the Act’s legal requirements.

Senator Gillibrand remarked, “The updated version of the GENIUS Act makes significant improvements to a number of important provisions, including consumer protections, authorized stablecoin issuers, risk mitigation, state pathways, insolvency, transparency, and more.”