US Senate Passes GENIUS Act Regulating Stablecoins 68-30

The GENIUS Act, a significant piece of legislation aimed at regulating stablecoins, has recently passed through the US Senate with a vote of 68-30. The bill, drafted by Senator Elizabeth Warren, a senior member of the Senate Banking Committee, faced numerous challenges and amendments, particularly from Warren herself, who sought to impose stringent regulatory measures on stablecoin issuers.

One of the most contentious amendments proposed by Warren aimed to require stablecoin issuers to monitor and report every illicit transaction involving their tokens indefinitely. This proposal was seen as impractical and burdensome, drawing comparisons to the previously failed DeFi Broker Rule, which required protocols and node operators to collect the names and addresses of every wallet holder on their blockchains—a task acknowledged as impossible by Senate debates.

Warren's amendment was ultimately rejected, but she did succeed in including provisions to mitigate risks associated with executive branch corruption related to stablecoins. She highlighted a $2 billion USD1 stablecoin deal in Abu Dhabi, where Emirati-backed MGX used a Trump family-associated stablecoin to invest in Binance. Although other senators argued that existing ethics laws already covered the president and vice president, Warren's efforts to link President Donald Trump's acceptance of a $400 million Boeing 747 from Qatar to the MGX transaction suggest potential future campaign narratives or investigations if Democrats regain power.

Despite Warren's efforts, the GENIUS Act, as passed, promotes the use of dollar-denominated stablecoins, aligning with the goal of maintaining dollar hegemony. Senator Kirsten Gillibrand, a fellow Democrat, supported this approach, recognizing the inevitability of technological change and the importance of the crypto ecosystem running on dollar-denominated stablecoins rather than other currencies like the yuan or renminbi.

The passage of the GENIUS Act marks a significant step in the regulation of stablecoins, balancing the need for oversight with the recognition of the crypto industry's growth and potential. The bill's success in navigating through the Senate, despite Warren's attempts to impose heavy-handed regulations, indicates a growing acceptance of the crypto ecosystem within the legislative framework. This development is likely to pave the way for further advancements in the crypto industry, as it provides a clearer regulatory path for stablecoin issuers and users alike.