"Hagerty's GENIUS Act: Clarifying Stablecoin Regulations, Boosting US Crypto Leadership"

Tennessee Senator Bill Hagerty has introduced new legislation aimed at providing regulatory clarity for stablecoins, a type of cryptocurrency pegged to the value of a stable asset like the US dollar. The bill, known as the GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act, seeks to establish clear regulations for stablecoins, defining them as digital assets pegged to the USD and setting licensing and reserve requirements for issuers.

The GENIUS Act proposes that stablecoin issuers with more than $10 billion in assets would be subject to regulations by the Federal Reserve, while those with less than $10 billion would fall under state regulations. The bill also mandates monthly audited reports on reserves and imposes criminal penalties for false reporting. The legislation is expected to move quickly through committees in Congress and will be discussed in a press conference with David Sacks.

Hagerty, a long-time proponent of regulating the crypto space, has previously pitched the Digital Clarity Act, which aimed to provide much-needed certainty for digital asset intermediaries and remove barriers to the growth and liquidity of US cryptocurrency markets. He believes that the current lack of regulatory clarity discourages investment and job creation in the US and jeopardizes the country's leadership in transformational technology.

The GENIUS Act is co-sponsored by Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis, representing a bipartisan effort to create guidelines for the crypto industry. The Office of the Comptroller of the Currency would regulate and supervise nonbank stablecoin issuers under the proposed legislation.

The introduction of the GENIUS Act comes as regulators have been scrutinizing the quality of assets backing stablecoins, including Tether's USDT token, amid concerns over liquidity and the ability to meet mass redemption requests under market stress. Proponents argue that federal oversight would enhance the credibility of stablecoins and promote broader adoption within the financial system.

The bill's introduction follows a report by Chainalysis that stablecoin volume is shifting away from US platforms, likely due to barriers imposed by sputtering regulatory progress on stablecoins and digital assets. The stablecoin market surpassed $215 billion in size and over $34 trillion in yearly aggregated transfer volume as of February 3, 2025.