The Senate’s passage of the GENIUS Act marks the first time stablecoin legislation has cleared either Congressional chamber, along bipartisan lines. The bill—establishing federal standards for the issuance, trading, and custody of stablecoins—passed with a 68-30 vote, including support from 18 Democrats.
The House of Representatives must now pass the bill for it to become law. However, the Senate may have been the tougher nut to crack.
“This clears a major hurdle, especially since some of the most vocal critics of crypto and digital assets sit in the Senate,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research.
Roughly 97% of stablecoins are denominated in U.S. dollars, so regulation in the U.S. could have global ripple effects across the crypto industry. Even European banks are taking note. France’s Société Générale, for example, is launching a stablecoin pegged to the U.S. dollar after its euro-backed stablecoin failed to gain traction.
The Framework Behind It
The GENIUS Act establishes a federal framework for Permitted Payment Stablecoin Issuers, while allowing state-supervised issuers to continue operating under the same national standards. This is expected provide financial institutions and other large entities with a clear, reliable path to market under consistent expectations. Already, there have been reports that Walmart and Amazon are exploring the development of their own stablecoins under the law’s framework.
Each stablecoin token must be fully backed by U.S. dollar reserves, verified through monthly audits. By ensuring issuers maintain adequate reserves to support the value of their stablecoins, the law aims to safeguard investors and promote stability within the broader stablecoin market.
Additionally, all stablecoin issuer would be required to comply with anti-money laundering and Know Your Customer regulations.
Next Steps
The bill must still pass the House of Representatives, which has been considering its own STABLE Act. Key differences between the two proposals remain, particularly regarding yield-bearing stablecoins and which entities would be authorized to issue them.
“The next step is reconciliation, likely aimed at aligning GENIUS with the House’s STABLE Act,” Wester said. “That could get contentious. That said, this is all good. It shows real momentum. We’re no longer debating if stablecoins will be regulated; we’re debating how. And both bills show a serious effort to give the market legal clarity.
“If reconciliation lands in a workable middle ground, we could finally see the U.S. establish a framework that gives bank-issued, fintech-issued, and platform-issued stablecoins a path to compliance,” he said. “It’s long overdue.”
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