US Senate Advances Landmark Stablecoin Regulation Bill, GENIUS Act

Stablecoin Regulation Takes a Major Step Forward

The U.S. Senate voted 66-32 to advance the GENIUS Act, a landmark bill regulating stablecoins. The legislation mandates that stablecoins be fully backed by low-risk assets such as U.S. Treasuries or insured bank deposits, aiming to reduce volatility and enhance consumer protection. Additionally, it enforces anti-money laundering and anti-terrorism compliance, with priority repayment for coin holders in bankruptcy scenarios.

Key Implications of the GENIUS Act

1. Cementing USD Supremacy: The bill requires stablecoins to be backed by U.S. dollars or Treasuries, reinforcing the dollar's dominance. Major issuers like Tether, which already adhere to similar practices, will see their integration into the U.S. financial system deepen.

2. Curbing Big Tech Ambitions: Tech giants like Meta, Apple, and Amazon face strict criteria to issue stablecoins, addressing concerns about their potential dominance in financial infrastructure. This aligns with the backlash against Meta’s Libra in 2019.

3. Tighter Oversight for Foreign Issuers: Tether and other offshore issuers will now fall under the same regulatory framework as U.S.-based providers, closing a previous loophole that allowed them to operate with fewer constraints.

4. No Yield-Bearing Stablecoins: The bill prohibits interest or yield payments on regulated stablecoins, potentially steering investors toward tokenized money market funds.

Controversy Surrounds the Bill

Despite its progress, the GENIUS Act faces criticism, particularly over President Trump’s ties to the rapidly growing USD1 stablecoin. Senator Elizabeth Warren warns the bill could enable corruption, highlighting the political complexities surrounding its passage.

The final vote is expected soon, with the bill likely moving to the House of Representatives next. If enacted, the GENIUS Act could significantly reshape the stablecoin landscape, reinforcing U.S. financial dominance while curbing the influence of tech monopolies and foreign issuers.