Senate Receives Bipartisan Amendment to GENIUS Act for Stablecoin Regulation

The U.S. Senate has received the draft text of a bipartisan amendment to the GENIUS Act, according to crypto reporter Eleanor Terrett. Two informed Senate sources revealed that the amendment will include new content related to consumer protection, bankruptcy proceedings, and ethical standards.

This development follows the Senate's vote on May 9th, where the "Stablecoin Innovation and Safety Act" (GENIUS Act) was rejected by a vote of 48-49. Democratic senators collectively voted against the motion to proceed with the bill. The GENIUS Act aimed to establish the first U.S. regulatory framework for stablecoins, which are digital tokens pegged to the dollar and other fiat currencies.

Democrats had demanded explicit provisions to prohibit current and former executive branch officials, including Trump and his family members, from holding or trading cryptocurrencies. They also sought to strengthen anti-corruption measures. According to two informed sources, after the committee's approval, the bill has been modified as requested by Democrats. These modifications include retaining each state's regulatory authority over foreign-issued stablecoins and expanding the scope of monitoring suspicious transactions involving stablecoin users.

The bipartisan amendment to the GENIUS Act signifies a continued effort to address the regulatory challenges posed by stablecoins. The inclusion of new content related to consumer protection, bankruptcy proceedings, and ethical standards indicates a more comprehensive approach to regulating this emerging financial technology. This amendment aims to balance innovation with the need for robust regulatory oversight, ensuring that stablecoins can operate within a framework that protects consumers and maintains the integrity of the financial system.

The rejection of the original GENIUS Act highlighted the deep divisions within the Senate regarding the regulation of stablecoins. Democrats' demands for stricter provisions and the inclusion of anti-corruption measures reflect their concerns about the potential risks associated with these digital assets. The bipartisan amendment represents a compromise that addresses these concerns while also moving forward with the establishment of a regulatory framework for stablecoins.

The modifications to the GENIUS Act, including the retention of state regulatory authority over foreign-issued stablecoins and the expansion of monitoring for suspicious transactions, demonstrate a commitment to a multi-faceted approach to regulation. This approach recognizes the importance of both federal and state oversight in ensuring the safety and stability of the financial system. The amendment's focus on consumer protection, bankruptcy proceedings, and ethical standards further underscores the need for a comprehensive regulatory framework that addresses the unique challenges posed by stablecoins.