TL;DR
- Bipartisan Framework: The reintroduced GENIUS Act, led by a bipartisan coalition, seeks to establish a clear regulatory pathway for U.S. stablecoin issuers while safeguarding consumers and maintaining financial stability.
- Innovation & Oversight: The bill aims to unlock stablecoins’ economic potential to boost transaction efficiency and U.S. Treasury demand, balancing innovation with robust oversight to mitigate systemic risks.
- Competitive Edge for U.S. Firms: By imposing stricter standards on foreign issuers and aligning oversight with market capitalization, the legislation is designed to give U.S.-based companies a competitive advantage in the global stablecoin market.
U.S. lawmakers have reintroduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. Spearheaded by a bipartisan coalition that includes Senators Bill Hagerty (R-TN), Tim Scott (R-SC), Kirsten Gillibrand (D-NY), Cynthia Lummis (R-WY), and Angela Alsobrooks (D-MD), the revised bill aims to provide a structured path for stablecoin issuers while maintaining consumer protection, financial stability, and national economic interests.
Enhancing Transaction Efficiency and Financial Innovation
The GENIUS Act has been created after many discussions with people from the industry, academic experts, and government officials. Supporters of the bill say it aims to harness the economic benefits of stablecoins while ensuring there is oversight to reduce systemic risks.
Senator Hagerty mentioned in the press release that stablecoins can enhance transaction efficiency, drive demand for U.S. Treasuries, and position the U.S. as a leader in financial innovation.
Meanwhile, Senate Banking Committee Chairman Tim Scott framed the legislation as necessary to ensure the stablecoin sector grows within the U.S. regulatory umbrella, preventing American firms from being outcompeted by foreign issuers.
Stricter Standards for Foreign Issuers
A key aspect of the updated GENIUS Act is its tougher stance on non-U.S. stablecoin issuers. The legislation introduces stricter reserve requirements, anti-money laundering (AML) compliance, counter-terrorism financing checks, and liquidity mandates.
These high standards could create formidable barriers for foreign stablecoin issuers, giving U.S.-based companies like Circle (issuer of USDC) and Ripple (issuer of RLUSD) a competitive edge.
The bill maintains its core framework, which is that stablecoin issuers with over $10 billion in market capitalization will fall under Federal Reserve oversight while smaller issuers will continue to be regulated at the state level.
Legislative Pathway and Market Impact
The GENIUS Act is part of a larger effort to create a stablecoin framework in the U.S. It is similar to other proposals, such as the Clarity for Payment Stablecoins Act and the Lummis-Gillibrand Payment Stablecoin Act. However, it is unclear how the bill will progress in Congress.
If approved by the Senate Banking Committee, it will move to a full Senate vote before advancing to the House of Representatives. Should both chambers approve it, the bill will head to President Trump’s desk for final approval or veto. As it stands now, the upcoming March 13 vote will be a key milestone in determining whether the bill will move forward or face additional revisions in its journey toward becoming law.
