Senate Approves GENIUS Act Regulating Stablecoins 51-23

The U.S. Senate made a significant move on June 17 by approving the GENIUS Act, a comprehensive federal bill aimed at regulating the cryptocurrency sector, particularly stablecoins. The bill, passed with a vote of 51 to 23, establishes a framework designed to foster growth in stablecoins used for payment purposes. This legislation now advances to the House of Representatives, which had previously passed a different stablecoin bill through committee.

The GENIUS Act, spearheaded by Republican Senator Bill Hagerty, follows weeks of committee discussions, negotiations, and procedural votes. The act mandates that stablecoin issuers fully back their cryptocurrencies with U.S. dollars or equivalent liquid assets. Issuers with stablecoins exceeding $50 billion in market value must undergo annual audits. The legislation also provides guidelines for foreign issuers and grants crypto holders “super-priority creditor” status in the event of issuer bankruptcy.

Under the GENIUS Act, public companies like Meta and Amazon face restrictions on issuing stablecoins. These companies can only issue stablecoins if they meet specific financial risk and consumer data privacy standards, reflecting traditional financial institutions’ efforts to limit non-bank entities. Democrats have expressed concerns about foreign issuers complying with anti-money laundering standards and corporate formation requirements.

Controversies have arisen over President Donald Trump’s ties with cryptocurrency initiatives, raising potential conflicts of interest. The involvement of Trump’s affiliated World Liberty Financial in launching its own stablecoin coincided with the Senate’s debate on the bill. Despite these controversies, the GENIUS Act successfully passed the Senate and now awaits consideration by the House of Representatives.

In April, the House cleared its stablecoin bill through committee but has not yet conducted a full vote. Experts suggest that the House might adopt the GENIUS Act or merge stablecoin rules with a broader market structure bill. The Trump administration supports the GENIUS Act, with Trump expressing a desire to see the bill on his desk by August.

The GENIUS Act aims to strengthen the U.S. dollar's dominance in the global financial system by providing a clear and transparent regulatory environment for stablecoins. This move is expected to enhance investor confidence and promote the adoption of stablecoins as a reliable medium of exchange. The legislation also sets the stage for future developments in the cryptocurrency industry, paving the way for more innovative financial products and services.

The passage of the GENIUS Act marks a pivotal moment in the regulation of stablecoins, addressing long-standing concerns about the lack of oversight in the cryptocurrency market. By establishing clear rules and requirements for stablecoin issuers, the act seeks to protect consumers and ensure the stability of the financial system. The legislation now moves to the House for further consideration, where it is expected to face additional scrutiny and potential amendments.

The approval of the GENIUS Act has been met with mixed reactions from industry stakeholders. While some view it as a positive step towards legitimizing stablecoins and promoting their widespread adoption, others express concerns about the potential impact on innovation and competition in the cryptocurrency market. Despite these differing opinions, the passage of the act represents a significant milestone in the regulation of stablecoins and sets the stage for future developments in the crypto industry.