In a major legislative breakthrough for the cryptocurrency industry, the United States Senate on Tuesday passed the GENIUS Act, the first federal law to set guardrails for US dollar-pegged stablecoins.
The bill passed with a 68-30 vote, marking a critical step toward establishing a regulated framework for the issuance and oversight of digital dollars by private companies.
The bill still needs approval from the Republican-controlled House, but its Senate passage marks a pivotal moment — not only for stablecoin technology, but also for the growing political influence backing it.
What is the GENIUS stablecoin bill?
The GENIUS Act — formally known as the Guiding and Establishing National Innovation for US Stablecoins Act — introduces comprehensive federal standards for the stablecoin sector.
Key provisions include full reserve requirements, mandatory monthly audits, and strict anti-money laundering protocols.
“The GENIUS Act will protect consumers, enable responsible innovation, and safeguard the dominance of the US dollar,” said Sen. Kirsten Gillibrand, D-NY, one of the sponsors of the bill, in a statement.
By creating a clear regulatory path, the bill broadens participation to include banks, fintech firms, and large retailers aiming to issue stablecoins or integrate them into payment systems.
Its passage also grants a federal seal of legitimacy to a critical segment of the digital asset ecosystem, likely encouraging further adoption by traditional financial institutions.
The momentum is already evident—Circle, the issuer of the USDC stablecoin and the industry’s second-largest player, recently went public, with shares soaring nearly 170% on debut.
John Wu, president of crypto firm Ava Labs, called the bill a foundational moment for the industry.
“This is a foundation for legitimizing stablecoins and embedding them into the global network of money movement,” Wu said in a statement.
Source: World Economic Forum
How the GENIUS stablecoin bill affects stablecoin issuers?
The GENIUS Act is expected to redraw the stablecoin map, giving US-regulated players such as Circle (USDC), PayPal USD, and future bank-issued tokens a competitive edge over offshore issuers like Tether.
“Tether’s exclusion from US financial rails could lead to a reshuffle in stablecoin dominance,” said Himanshu Maradiya, Founder of crypto exchange CIFDAQ.
“Expect US-based stablecoins to gain market share and deeper institutional use. Investors should watch for new GENIUS-compliant entrants, as regulatory clarity fuels capital inflows into compliant DeFi and stablecoin infrastructure, key pillars for the next phase of crypto’s mainstream adoption,” he said.
The legislation does allow for foreign stablecoins to operate in the US, but only if their home regulatory regimes are deemed equivalent and if they maintain sufficient reserves within US financial institutions.
Tether, the largest stablecoin issuer with $155 billion in circulation, may struggle to meet the new US compliance standards outlined in the GENIUS Act.
The legislation offers a pathway for foreign issuers to operate in the US, but it involves stringent requirements such as equivalent foreign regulation, oversight by the Office of the Comptroller of the Currency, and maintaining adequate reserves in US banks.
Tether must either adapt to these rules or risk losing access to the US market as domestic players gain scale under federal oversight.
Source: The Block
Traditional finance and retail prepare to enter but limits placed on Big Tech
The bill’s passage also opens the door for mainstream adoption.
Shopify, in partnership with Coinbase and Stripe, already enables USDC-powered payments, and Bank of America has signaled interest in stablecoin issuance.
With stablecoin transactions hitting $28 trillion in 2023—surpassing Visa and Mastercard combined, according to Deutsche Bank—the stakes are high.
the GENIUS Act restricts large non-financial tech companies from directly issuing stablecoins unless they collaborate with regulated financial institutions.
While this helps prevent another “Facebook Diem” scenario, critics warn that enforcement and oversight mechanisms remain vague.
Companies will likely be supervised by the Office of the Comptroller of the Currency, with expectations of further clarity as the bill moves to the House of Representatives.
Bill receives bipartisan support but some criticism persists
Ahead of the 2024 election cycle, a network of crypto-focused Silicon Valley executives and political strategists launched an aggressive push in Washington, forming a series of super PACs that ultimately spent over $130 million to sway tight congressional contests across the country.
The campaign yielded impressive results: candidates backed by these super PACs—spanning both Democrats and Republicans—won 53 out of 58 races.
That effort is now bearing fruit, as 18 Senate Democrats joined Republicans in voting for the GENIUS Act, with only two Republican senators opposing it.
Among Democrats, the legislation gained notable support from a coalition led by Senator Kirsten Gillibrand of New York, despite opposition from some senior figures in the party.
Senator Elizabeth Warren of Massachusetts was among the harshest critics, warning that the bill’s “thin regulation” resembled the lax oversight that contributed to the 2008 financial crisis.
“It’s the same move a second time,” she said. “Why is the industry here asking for regulation? They want the gold star of US government oversight without really having significant oversight.”
Senate Majority Leader Chuck Schumer also opposed the bill, acknowledging that it had improved during negotiations but arguing it still lacked key anti-corruption safeguards—especially those aimed at preventing Donald Trump and his family from continuing to profit from the cryptocurrency sector.
Democratic lawmakers had initially hoped to address these issues through amendments.
Senate Majority Whip John Thune had assured Democrats their proposed changes would be considered, leading to over 100 suggested modifications.
But many of those concerns remained unresolved by the time the bill reached the Senate floor.
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