Senator Hagerty Introduces Bipartisan Bill to Regulate Stablecoins

Senator Bill Hagerty Introduces Bill to Regulate Stablecoins in the US

In a significant development, Senator Bill Hagerty has introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a bipartisan bill aimed at creating a comprehensive regulatory framework for stablecoins. The legislation seeks to address the growing market of stablecoins, which have surged to a market value of $205 billion, with Tether's USDT token maintaining market dominance at a $140 billion market cap.

The GENIUS Act, co-sponsored by Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis, establishes clear regulations for stablecoins, defining them as digital currencies tied to the value of the US dollar (USD). It requires stablecoin issuers to meet specific licensing and reserve requirements, ensuring they have enough reserves to back the stablecoins they issue. The bill applies stricter Federal Reserve rules to issuers with over $10 billion in stablecoin assets, while issuers with less than $10 billion will follow state-level regulations.

The legislation also aims to support financial inclusion by making transactions more efficient and promoting the US dollar's global dominance. It requires stablecoin issuers to submit monthly audited reports on their reserves and imposes criminal penalties for providing false information. Nonbank stablecoin issuers would be supervised by the Office of the Comptroller of the Currency, a Treasury Department bureau.

This legislative push comes amid increasing scrutiny of Tether's reserves and rising concerns about stablecoins' capacity to withstand large-scale redemptions, underscoring the urgency for clear regulatory oversight. The bill has gained bipartisan support and is expected to move through committees quickly, with further discussion in an upcoming press conference with David Sacks.

The introduction of the GENIUS Act follows President Donald Trump's recent executive action promoting dollar-backed stablecoins while opposing central bank digital currency development. Trump's administration has shifted from initial crypto skepticism to strong support, contrasting with former President Joe Biden's enforcement-focused approach.