Senate Banking Committee Passes Stablecoin Bill: What the Genius Act Means 

If passed, this law could bring clarity to an industry that’s been operating in a legal gray area. But not everyone is convinced it’s a good idea.

What’s in the GENIUS Act? 

The GENIUS Act, introduced by Senators Bill Hagerty, Kirsten Gillibrand, and Cynthia Lummis, seeks to establish clear guidelines for the issuance and management of payment stablecoins in the United States. Under the proposed legislation, only entities classified as “permitted payment stablecoin issuers” would be authorized to issue these digital assets. 

This category includes subsidiaries of insured depository institutions, federally qualified nonbank payment stablecoin issuers, and state-qualified payment stablecoin issuers operating under regulatory frameworks deemed “substantially similar” to federal standards.

To safeguard consumers and maintain financial stability, the bill mandates that stablecoin issuers maintain a one-to-one reserve backing for their issued tokens. 

These reserves must consist of high-quality liquid assets such as cash, short-term U.S. Treasury bills, or central bank deposits. Issuers are also required to publicly disclose their reserve compositions and redemption policies, with these disclosures subject to verification by registered public accounting firms. 

Creating a bipartisan regulatory framework for stablecoins is fundamental to preserving U.S. dollar dominance and advancing responsible financial innovation,

said Senator Lummis at the hearing. 

Furthermore, the GENIUS Act imposes stringent regulatory oversight on stablecoin issuers, aligning them with bank-like regulations. 

This includes adherence to capital and liquidity requirements, risk management protocols, and compliance with existing financial regulations such as the Bank Secrecy Act and the Gramm-Leach-Bliley Act's customer privacy requirements. 

What’s Next for the Senate Stablecoin Bill and the Future of Stablecoins

Making it through the Senate Banking Committee is a big win, but to become a law, the bill still needs 60 votes in the Senate. 

With consumer watchdogs, political tensions, and crypto power players all weighing in, the Senate Stablecoin Bill faces an uphill battle in the Senate. If it doesn’t gain enough bipartisan support, the bill could stall or be sent back for revisions.

On one side, crypto advocates argue that clear rules are needed to prevent future industry meltdowns and keep stablecoin innovation in the U.S. rather than pushing it offshore. On the other, critics warn that the bill’s gaps in consumer protections and political entanglements could cause more harm than good.

As the bill moves to the full Senate, its fate remains uncertain. Lawmakers must decide whether to support a framework that fosters stablecoin growth under clear regulations or reconsider the legislation due to concerns over consumer protection and political entanglements. The outcome will shape the future of digital currencies in the U.S. and determine how they integrate into the broader financial system.