Senate Passes GENIUS Act 68-30 for Stablecoin Regulation

The United States Senate has passed the Guaranteeing Essential National Infrastructure Using Stablecoins (GENIUS) Act, marking a significant milestone in the regulation of stablecoins. The bill, which received bipartisan support with a 68-30 vote, aims to establish a clear framework for regulated stablecoins in the country. This legislation is seen as a step towards fulfilling President Trump's campaign promises regarding cryptocurrency.

Maredith Hannon, the head of business development for digital assets at WisdomTree, praised the GENIUS Act, stating that it will foster innovation and improve the crypto and financial services industries. Hannon emphasized the importance of clear, enforceable standards to ensure the safety, transparency, and integrity of the emerging industry. She also highlighted the need for stablecoin issuers to hold reserves in high-quality, highly liquid assets, a standard that WisdomTree's tokenized money market fund, WTGXX, already adheres to.

The GENIUS Act now moves to the House of Representatives for a final vote before it can be signed into law by President Trump. Both the Senate and House bills will be reconciled into one. Senator Bill Hagerty, who co-sponsored the Act, expressed optimism that the law will cement U.S. dollar dominance, protect customers, drive demand for U.S. Treasuries, and ensure that digital asset innovation happens within the U.S.

Stablecoins, which are cryptocurrencies pegged to stable reserve assets like the U.S. dollar, are designed to maintain a stable value, making them ideal for payments, remittances, and as a settlement layer for DeFi protocols. However, the regulatory environment around stablecoins has been murky, fragmented, and sometimes hostile, raising fears over reserve backing, systemic risks, and transparency. The collapse of LUNA’s $40 billion algorithmic stablecoin UST in May 2021 only exacerbated these concerns.

Hannon believes that the GENIUS Act provides a clear framework for U.S. stablecoin issuers while barring non-compliant foreign issuers. Stablecoin issuers will be required to submit regular audits, undergo regulatory supervision, maintain full backing by high-quality, highly liquid assets, and disclose real-time data on reserves. This regulatory clarity is expected to foster innovation and advance the industry, according to Hannon.

The passing of the GENIUS Act is seen as a culmination of spirited lobbying and engagement from different figures in the cryptocurrency ecosystem. The legislation is expected to drive demand for U.S. Treasuries and ensure that digital asset innovation happens within the U.S., rather than overseas. However, critics, including Massachusetts Senator Elizabeth Warren, have raised concerns about the potential for the legislation to benefit powerful economic players at the expense of competition laws.

Despite the criticism, Hannon remains optimistic that a well-regulated stablecoin environment will support innovation while protecting consumers and systemic stability. The GENIUS Act is seen as a significant step towards achieving this goal, and its passage is expected to have a positive impact on the crypto and financial services industries.