Senate Passes GENIUS Act Regulating Stablecoins 66-32

The United States Senate has passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a significant piece of legislation aimed at regulating the stablecoin sector. The bill, which passed with a 66–32 procedural vote on May 20, is now heading to a debate on the Senate floor. The GENIUS Act seeks to set clear rules for stablecoin collateralization and mandate compliance with Anti-Money Laundering laws, providing a comprehensive framework for the deployment and oversight of stablecoins.

Andrei Grachev, managing partner at DWF Labs and Falcon Finance, highlighted the importance of this legislation, stating that it not only regulates stablecoins but also legitimizes them. "This act doesn’t just regulate stablecoins, it legitimizes them," Grachev said. "It sets clear rules, and with clarity comes confidence. That’s what institutions have been waiting for." Grachev added that stablecoins are no longer just a crypto experiment but a better form of money, faster, simpler, and more transparent than fiat.

The GENIUS Act is seen as a potential first step toward establishing a unified digital financial system that is borderless, programmable, and efficient. Republican Senator Cynthia Lummis, a co-sponsor of the bill, pointed to Memorial Day as a potential target for its passage. Grachev noted that regulatory clarity alone will not drive institutional adoption; products offering stable and predictable yield will also be necessary. Falcon Finance is currently developing a synthetic yield-bearing dollar product designed for this market.

Despite broad support for the GENIUS Act, some critics argue that the legislation does not go far enough. Vugar Usi Zade, the chief operating officer at Bitget exchange, noted that the bill does not fully address offshore stablecoin issuers like Tether, which continue to play an outsized role in global liquidity. He added that US-based issuers will now face steeper costs, likely accelerating consolidation across the market and favoring well-resourced players who can meet the new thresholds.

The passage of the GENIUS Act is expected to bring legal clarity, consumer protections, and oversight to the growing stablecoin market. This regulatory framework could boost trust and adoption, drawing institutional investors and legitimizing stablecoins for decentralized finance (DeFi) and payment systems. The act requires 100% reserve backing and transparency, which could enhance the legitimacy of stablecoins and attract significant investor interest and inflows.

However, the act's stringent rules may pose challenges for smaller issuers, potentially stifling innovation. Critics have raised concerns about financial instability and loopholes, with some arguing that the act could legitimize certain crypto abuses. The final impact of the GENIUS Act will depend on its details and enforcement, potentially shaping the growth and global competitiveness of the crypto industry. Stakeholders are advised to closely monitor the progress and implementation of this legislation.

Brian Armstrong, the CEO of Coinbase, has been a vocal supporter of the GENIUS Act, advocating for its swift passage to remove regulatory hurdles and promote cryptocurrency innovation. Armstrong's endorsement underscores the industry's anticipation of the positive impact this legislation could have on the future of digital assets. As the act awaits the president's approval, the cryptocurrency market is poised for a wave of innovation and mainstream adoption, driven by the regulatory clarity and consumer protections provided by the GENIUS Act.