The Senate voted 66-32 to move forward with the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), a major step towards federal regulation of stablecoins.
What the GENIUS Act Does
This bill aims to create a national framework for companies that issue stablecoins. Key features include:
- Full Asset Backing: Stablecoin issuers would be required to fully back their coins with assets.
- Transparency Requirements: Monthly reserve disclosures and annual audits would be mandatory for issuers with over $50 billion in market cap.
- Restrictions on Algorithmic Stablecoins: These types of stablecoins would be prohibited.
- Big Tech Restrictions: Large tech companies would face stricter rules for issuing stablecoins, needing to meet specific financial risk and consumer privacy standards.
Overcoming Democratic Opposition
The bill’s advancement comes after Senate Democrats initially blocked it two weeks ago. Their concerns centered around consumer protection and potential conflicts of interest. However, several Democrats ultimately changed their votes, allowing the bill to proceed. Remaining concerns include strengthening anti-money laundering provisions, addressing foreign issuers, national security implications, and ensuring the safety and soundness of the financial system.
What’s Next?
The GENIUS Act is expected to undergo further amendments before a final vote, potentially by the end of the week. If passed, it would be the first federal law regulating the nearly $250 billion stablecoin market.
