The U.S. Senate is currently deliberating on the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), a bipartisan bill introduced in February 2025. Spearheaded by Senator Bill Hagerty (R-TN) and co-sponsored by Senators Kirsten Gillibrand (D-NY), Cynthia Lummis (R-WY), and Tim Scott (R-SC), the bill aims to establish a comprehensive regulatory framework for stablecoins—cryptocurrencies pegged to the U.S. dollar.
Key Provisions of the GENIUS Act
Reserve Requirements: Mandates that stablecoins be fully backed on a 1:1 basis by cash or U.S. Treasury securities, with monthly attestations to ensure compliance.
Issuer Oversight: Imposes Federal Reserve oversight on issuers with a market capitalization exceeding $10 billion, while allowing smaller issuers to remain under state-level regulation.
Consumer Protection: Prioritizes stablecoin holders in the event of issuer bankruptcy and prohibits algorithmic stablecoins.
Anti-Money Laundering (AML) Compliance: Requires issuers to adhere to U.S. AML and sanctions regulations.
Recent Developments and Political Dynamics
Initially, the bill garnered bipartisan support, passing the Senate Banking Committee with an 18–6 vote. However, recent concerns have emerged among Senate Democrats regarding potential conflicts of interest linked to the Trump family's involvement in the crypto sector. Specifically, World Liberty Financial, a company partly owned by the Trump family, plans to issue a stablecoin named USD1.
In response, nine Senate Democrats have withdrawn their support for the current version of the GENIUS Act, citing insufficient safeguards against money laundering and financial system risks. Prominent figures like Senators Elizabeth Warren and Jeff Merkley have voiced concerns over rejected amendments.
Despite these challenges, Senate Majority Leader John Thune is working to expedite the bill's consideration, aiming for a vote before the end of May 2025. The outcome of this legislation could significantly influence the future.