#GENIUSAct

The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) of 2025 is a bipartisan U.S. Senate bill introduced on February 4, 2025, by Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand, and Cynthia Lummis to regulate payment stablecoins. Key provisions include:

• Definition: Defines payment stablecoins as digital assets pegged to a fixed value (e.g., USD), used for payments, and not classified as securities or commodities.

• Regulation: Establishes a federal framework with dual state-federal oversight. Issuers with over $10 billion in market cap face federal regulation; smaller issuers can opt for state regulation if "substantially similar" to federal standards.

• Consumer Protections: Requires 1:1 reserve backing with USD or liquid assets, monthly reserve disclosures, annual audits for large issuers, and strict marketing rules to prevent misleading claims (e.g., no FDIC insurance or U.S. government backing).

• AML Compliance: Classifies issuers as financial institutions under the Bank Secrecy Act, mandating anti-money laundering and know-your-customer programs.

• Insolvency Rules: Prioritizes stablecoin holders’ claims in issuer bankruptcy but raises concerns about bank deposit subordination if a custodian bank fails.

• Status: Passed the Senate Banking Committee (18-6) on March 13, 2025, but failed a key Senate procedural vote on May 8, 2025, due to concerns over AML, national security, and insolvency provisions. Its future remains uncertain.

The Act aims to enhance transparency, protect consumers, and maintain U.S. dollar dominance in digital finance but faces criticism for potentially favoring crypto over traditional banking and insufficient safeguards.web:0,2,4,6,7,10,14,15,17post:2,3,6