Senate Banking Committee Passes GENIUS Act for Stablecoin Regulation

The Senate Banking Committee has passed the GENIUS Act with bipartisan support, marking a significant milestone in the regulation of stablecoins. The bill, authored by Senator Bill Hagerty, received an 18-6 vote in favor, with backing from all Republican members and Democratic Senators Mark Warner, Andy Kim, Lisa Blunt Rochester, Ruben Gallego, and Angela Alsobrooks. This bipartisan support underscores the growing recognition of the importance of stablecoins in the financial ecosystem and the need for clear regulatory standards.

Hagerty emphasized the bill’s importance in fostering financial innovation and maintaining the US’s leadership in digital assets. He stated that the legislation is a critical first step in establishing 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 GENIUS Act seeks to establish a comprehensive regulatory framework for stablecoin issuance and oversight. Under the proposed law, stablecoin issuers must maintain 1:1 reserves, ensuring that US dollars, insured bank deposits, or short-term Treasury bills back each issued token.

The bill also creates a dual regulatory pathway, allowing issuers to choose between federal oversight under the Office of the Comptroller of the Currency (OCC) or state-level supervision, provided that state regulations meet federal standards. This approach aims to address the unique challenges posed by stablecoins, including their potential impact on monetary policy and financial markets. Committee Chairman Senator Tim Scott highlighted the importance of regulatory clarity, stating that certain industries and American consumers have been in the dark for far too long. He added that the bill takes action to “end the weaponization of financial regulators,” which could relate to the bill’s content that explicitly classifies stablecoins as non-securities, placing them outside the jurisdiction of the Securities and Exchange Commission (SEC).

Positive reactions to the bill’s passage were widespread. Senator Cynthia Lummis, a vocal advocate for crypto regulation and member of the Committee, noted that the bill’s passage out of the Committee strengthens the regulatory framework for stablecoin issuers. She added that the bill gives the US a “competitive edge in the rapidly evolving digital asset space.” Circle CEO Jeremy Allaire called the Committee vote a “massive move,” highlighting the decision’s bipartisan nature. He also noted that it is a “huge step towards upgrading and making the dollar more competitive.” Coinbase chief policy officer Faryar Shirzad praised the bill’s progress and thanked the senators who supported it. Blockchain Association CEO Kristin Smith welcomed the decision, stating that the passage of the GENIUS Act is a smart step in the right direction for American innovation and economic leadership.

The bill is now moving to the full Senate for a vote. If enacted, the legislation would provide long-awaited clarity for stablecoin issuers and users, reinforcing the US’ role as a leader in digital currency regulation. The GENIUS Act's passage through the Senate Banking Committee is a critical first step in the regulatory process for stablecoins. It sets the stage for a broader discussion on how to integrate digital assets into the existing financial framework while protecting consumers and maintaining financial stability. As the GENIUS Act advances to the full Senate, stakeholders in the financial and technology sectors will be closely watching its progress. The legislation's success could pave the way for further regulatory developments in the digital asset space, providing a model for how to balance innovation with consumer protection. The bipartisan support for the GENIUS Act reflects a growing consensus on the need for clear and effective regulation of stablecoins, setting the stage for a more stable and secure financial future.