The Battle for Washington: How Coinbase, Circle, and Banks Will Shape the Final GENIUS Act

The GENIUS Act passed the Senate, but the real battle begins in the House: crypto companies and traditional banks are now fighting over the final version.

Why This Law Matters: A Quick Primer on GENIUS

The GENIUS Act (“Guaranteed and Enforceable Neutral Issuance Under Stablecoins Act”), was passed by the U.S. Senate in June 2025 and has quickly become one of the most talked-about digital asset initiatives in recent years. For the first time, it provides clear definitions of who can issue stablecoins, under what conditions, and what types of assets are required as reserves.

Why does it matter? Because until now, U.S. regulation has been fragmented: some companies operated under banking licenses, others under special state regimes (like Wyoming or New York), and some operated without any formal legal status at all. Meanwhile, the stablecoin market has grown from a few billion dollars in 2020 to nearly $2 trillion in circulation. Creating a coherent legal framework seems like the next logical step, especially as the U.S. tries to assert leadership in the race for a digital dollar.

But one important nuance is often overlooked: Senate approval is only half the battle. What comes next is an equally critical phase, the House of Representatives will now review and potentially rewrite the bill.

More on the Senate’s decision to approve the bill is available in our detailed overview here: Senate Passes the GENIUS Act — What It Means for Stablecoins

Why the Final Say on GENIUS Belongs to the House

While the bill's passage in the Senate was a major milestone, any celebration is premature. The ball is now in the House’s court, where the legislative process is often more contentious.

To understand how this process works, let’s briefly review how the U.S. Congress functions. It consists of two chambers: the Senate and the House of Representatives. The Senate is generally seen as the more stable and elite body, with 100 senators (two from each state) serving six-year terms. Senators typically focus on long-term strategic goals.

The House, by contrast, has 435 members, apportioned based on state population, and its membership is up for re-election every two years. This makes the House more responsive to voters and more prone to political friction. No federal law can pass without approval from both chambers. That’s why the House is where key amendments often get introduced, usually under intense lobbying pressure. And now, this is where the final battle over the wording of GENIUS will take place.

Team Crypto: “Pass It As Is”

Companies like Coinbase, Circle, and Gemini are pushing hard for the House to adopt the Senate version without changes. Through lobbying groups like Fairshake and Blockchain Association, they’re advocating for “clean passage”, a final vote on the bill without any edits. For them, this version offers the most operational freedom to non-bank issuers. It reduces legal and bureaucratic barriers and boosts their chances of competing with traditional finance.

According to CoinDesk, Coinbase alone held over 40 meetings with members of the House Financial Services Committee between May and June 2025. 

We explored Coinbase’s public lobbying stance in more detail in this interview with Kara Calvert, Coinbase VP of Policy: What the GENIUS Act Really Means.

Team Bankers: “Rein It In”

Meanwhile, traditional banks, Bank of America, Wells Fargo, and even regional credit unions, are just as engaged. Their concern is simple: they don’t want stablecoins to become de facto replacements for core banking products, especially payment and settlement services. And especially not if they generate yield (via interest on reserves) without being subject to the same regulatory requirements banks face.

The American Bankers Association (ABA) submitted detailed recommendations to the House, calling for tighter licensing rules, stricter reserve asset limitations, and a ban on interest payments to stablecoin holders. 

In short, they propose amendments that would fundamentally reshape GENIUS and remove the competitive edge for non-bank issuers. Specifically:

• Limit reserve assets to cash and short-term U.S. Treasuries with strict maturity rules;
• Ban any form of yield or interest payments to stablecoin users;
• Require registration and banking-like licenses for all non-bank issuers, including fintech startups and blockchain platforms.

Earlier this year, a major signal of banks’ growing role in the stablecoin ecosystem emerged: US Banks Jointly Announce Plans for a Unified Stablecoin Framework.

Who Sets the Rules Under GENIUS?

Both sides claim to want stability and reliability. But the core of the conflict is this: under GENIUS, who will operate the infrastructure of the digital dollar?

If banks win, stablecoins may turn into restricted tools with little practical utility. If the crypto sector prevails, we could see a new wave of financial decentralization.

And the House is where the final decision will be made.

Who’s Rewriting the Rules, According to David Sacks

David Sacks, a venture capitalist close to the Web3 space and Crypto Czar, gave an interview to CNBC on May 21, 2025. In it, he claimed GENIUS could bring “trillions of dollars in demand for Treasuries” and expressed confidence in its passage.

Weeks later, a quote that gained widespread traction on X, purportedly from Sacks, made an even sharper claim: “The GENIUS Act was written by the banking industry to keep stablecoin issuers uncompetitive”. That single line triggered a storm.

Sacks’s criticism focuses on several key provisions:

• Reserves must consist solely of government securities;
• Stablecoin issuers are prohibited from offering interest to users;
• The bill effectively forces decentralized projects to conform to quasi-banking structures.

In Sacks’s view, this institutionalizes a structural advantage for banks and centralized players, locking out small, independent teams. Even though large platforms like Coinbase support the bill, they can afford to meet regulatory demands. Smaller DeFi startups? Not so much.

What Did Sacks Really Mean?

There are two main ways to interpret his statement, and neither is particularly comforting.

First (the literal reading): banks were actively involved in drafting GENIUS and succeeded in embedding language that limits competition. Examples include the 100% reserve requirement (cash and Treasuries only), bans on interest, and narrow permissions for smart contracts, all of which make new digital instruments inflexible and bank-like.

Second (a more charitable reading): GENIUS draws a boundary between traditional finance and Web3. Under this model, banks and crypto aren’t in direct competition. Instead, they serve different domains. While that sounds reasonable, in practice this division could stifle innovation.

And it’s already clear who’s getting pushed out. No matter how the House proceeds, whether the Senate version is adopted or bank-friendly amendments are introduced, smaller DeFi teams are likely to lose. They lack the resources to comply with new licensing regimes or legal overhead, even though these projects are often the source of real innovation.

Industry Reaction: Optimism in the Crypto Space

Despite David Sacks’s sharp critique of the bill and his more cautious outlook, the crypto industry at large welcomed the Senate’s approval of GENIUS with optimism. Many companies see it as a long-overdue step toward regulatory clarity and a chance to legitimize stablecoin markets in the eyes of lawmakers and financial institutions.

Crypto exchange OKX posted a celebratory message following the Senate vote, writing: “We applaud the Senate for advancing crypto clarity. The GENIUS Act provides a real framework for the future of stablecoins”.

Republican Senator Tim Scott, one of the bill’s public supporters, shared a photo with bipartisan co-sponsors and captioned it: “Proud to see the Senate come together to support a digital future rooted in safety and innovation”.

So the question remains: Is this initiative a blow to competition or a long-overdue attempt to bring order to a chaotic digital asset market? The House will ultimately determine the final version and, with it, the shape of stablecoin regulation in the U.S.

We’ve also covered what the GENIUS Act means in terms of committee dynamics and political friction: Senate Banking Committee Moves GENIUS Act Forward.

What’s at Stake

GENIUS is still just a bill, one that could reshape the balance between crypto and traditional finance. It’s passed the Senate, but the real story will unfold in the House. And as crypto companies and banks jockey for influence, the debate becomes about more than regulation, it becomes about power.

1. Who controls the infrastructure of digital money?
2. Who gets to define the rules?
3. And who decides what “trust” looks like in the blockchain era?

Answers are coming. But for now, all we can do is watch as two mighty sectors, crypto and traditional finance, struggle to shape the future of digital currency in their image.

You might also be interested in our analysis of how the Trump campaign’s stablecoin exemption stance adds new tension to the regulatory debate: Trump and the Stablecoin Exception Debate.