GENIUS Act enforces federal oversight for stablecoin issuers with over $10B in market value.
Amendment 2307 allows state regulation for smaller stablecoin issuers under $10B.
Interest-yielding stablecoins may face a ban to ease concerns from traditional banks.
The United States Senate is advancing toward a critical vote this week on the Government Oversight of Enhanced National Interest in US Stablecoins Act, also known as the GENIUS Act. This bipartisan bill is designed to establish clear federal oversight of stablecoins, especially those issued by companies with over $10 billion in assets.
Senate Majority Leader John Thune filed a cloture motion on Monday, setting the legislative process in motion for a formal vote as early as midweek.
Federal Oversight for Large Stablecoin Issuers
The GENIUS Act aims to create a federal regulatory system for stablecoin issuers when their market capitalization rises above $10 billion. This strategy seeks to strengthen consumer protection measures while supporting financial stability and mandating transparency throughout the expanding stablecoin marketplace. Larger entities would operate under direct federal supervision according to this legislation which ensures their compliance with national financial standards.
Besides establishing new federal rules, the bill also offers an alternative for smaller stablecoin issuers. Amendment 2307 introduces an option for these firms to operate under state-level regulation if their market size remains below $10 billion. This adjustment is viewed as a compromise between the digital asset industry and traditional financial institutions. It also provides stablecoin issuers with flexibility while ensuring regulatory coverage across all market tiers.
Transparency and Reporting Requirements Introduced
The GENIUS Act includes specific measures to enforce accountability in stablecoin operations. Issuers would be required to provide monthly attestations of their reserves and make regular public disclosures confirming that each stablecoin is backed by US dollars or liquid assets such as Treasury bills. These reporting standards aim to reduce financial risk and improve public confidence in digital assets.
This legislative proposal tackles national worries regarding potential dangers from unregulated stablecoins issued abroad. Foreign-issued stablecoins operating in the United States need to fulfill all the same regulatory standards that domestic issuers are required to meet. The provision aims to protect national security interests by reducing possible risks to the financial system.
Interest-Yielding Tokens Face Possible Ban
Among the bill’s more debated elements is the proposed restriction on interest-yielding stablecoins. Traditional banks have long expressed unease over these instruments, arguing that they could draw deposits away from conventional savings accounts. The GENIUS Act responds to this concern by proposing a ban on stablecoins that offer interest to users.
The bill establishes protections against unfair competition between digital tokens and traditional banking products. The banking sector's aggressive lobbying has influenced legislative measures to enforce stricter regulations on digital assets that operate like bank deposits.
After Senate approval, the GENIUS Act advances to the House of Representatives where legislators continue drafting a related stablecoin bill called the STABLE Act.
