"Hagerty's GENIUS Act: A New Era for Stablecoin Regulation"

Senator Hagerty Introduces GENIUS Act to Potentially Regulate Tether and USD Coin in Stablecoin Framework

US Senator Bill Hagerty has introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act to the Senate, marking a significant step towards creating a regulatory framework for stablecoin payments. The legislation, which follows a discussion draft released in October, aims to solidify the US dollar's global dominance by providing a clear and safe regulatory environment for stablecoin innovation.

The GENIUS Act defines a payment stablecoin as a digital asset used for payments or settlements, pegged to a fixed monetary value. Under the legislation, stablecoin payments must be backed by US currency, demand deposits at insured institutions, Treasury bills, or other approved assets. The Act mandates Federal Reserve oversight on issuers with a market value exceeding $10 billion, following bank regulations. In contrast, nonbank issuers will be regulated by the Office of the Comptroller of the Currency. Issuers with a market value below $10 billion are subject to state regulation, but those above the threshold may apply for state-regulation exemptions.

Currently, only Tether (USDT) and USD Coin (USDC) exceed the $10 billion market capitalization threshold. The Act requires monthly audited reports on stablecoin reserves, with penalties for false reporting. It outlines clear procedures for institutions seeking licenses to issue stablecoins, establishes reserve requirements, and prescribes regulatory standards, supervisory mechanisms, and enforcement procedures.

Senator Hagerty emphasized the potential benefits of stablecoin innovation, highlighting how it could enhance transaction efficiency and drive demand for US Treasuries. He noted that the advantages of strong stablecoin development are vast and far-reaching. The bill is co-sponsored by Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis, indicating bipartisan support for the legislation.

In a recent statement, Senator Lummis stressed the importance of 2025 as a pivotal year for digital assets, warning that the US must take action to prevent other countries from leading in establishing regulations for stablecoins. She urged that creating a bipartisan regulatory framework for stablecoins is critical to maintaining the US's dollar dominance and promoting responsible financial innovation.

Fox Business reporter Eleanor Terrett reported expectations for the bill to advance swiftly through the legislative process