Written by: White55, Mars Finance
Legislative Process: The Dramatic Turn from 'Near Death' to 'Resurrection'
From May to June 2025, the political and financial battle in the U.S. Senate surrounding the (GENIUS Act) (full name: Guidance and Establishment of United States Stablecoin National Innovation Act) can be described as an epic conflict intertwined with politics and finance. This bill, aimed at establishing the first federal regulatory framework for the $250 billion stablecoin market, experienced a thrilling reversal from 'procedural death' to 'bipartisan compromise,' ultimately advancing to the Senate floor debate stage with a voting result of 68 to 30. However, behind this victory lies months of mutual interests exchanged between the two parties, lobbying battles among industry giants, and the moral controversies sparked by the Trump family's 'crypto gold mine.'
Timeline Review:
March 2025: Republican Senator Bill Hagerty formally proposed the initial draft of the bill, aiming to establish a 'federal + state' dual-track regulatory system for payment-type stablecoins.
May 8: The bill failed its first procedural vote unexpectedly with a 48:49 result, as the Democrats collectively turned against it citing 'Trump family conflict of interest.'
May 15: The two parties held urgent consultations, introducing a revised version of the bill that removed clauses targeting the Trump family's crypto business in exchange for some Democratic support.
May 20: The amendment passed the crucial 'Cloture Vote' with a 66:32 result, clearing legislative hurdles.
June 11: The Senate passed the bill with an overwhelming advantage of 68:30, entering the final debate and amendment procedures.
Senate Majority Leader John Thune spoke on Wednesday, supporting the vote to pass the (GENIUS Act). Source: U.S. Senate
The core of this series of twists lies in the Republican Party skillfully packaging the bill as a strategic tool for 'dollar digital hegemony,' while concerns within the Democratic Party about 'regulatory vacuum leading to financial risk' led to a loosening of positions. Senate Majority Leader John Thune's lobbying rhetoric is highly provocative: 'If the U.S. does not lead the stablecoin rules, China will fill the void with the digital yuan!'
Core Provisions: Regulatory Blueprint and 'Devil's Details'
The regulatory framework design of the (GENIUS Act) attempts to walk a tightrope between 'encouraging innovation' and 'preventing risks,' with its core provisions summarized into the following six pillars:
Dual Regulation and Issuance Threshold
Stablecoins with a scale exceeding $10 billion will be federally regulated (led by the Office of the Comptroller of the Currency), while those below $10 billion can choose state-level regulation, but state standards must align with federal ones. This design calms states' autonomy while delineating red lines for giants, seen as a disguised protection for Circle (USDC) and Tether (USDT).
1:1 Reserve and Asset Isolation
Mandating stablecoins to be fully collateralized by high liquidity assets such as cash and short-term U.S. Treasury bonds, and strictly isolating reserve assets from operational funds. This provision directly targets the 2022 Terra crash event but allows the inclusion of 'risk assets' such as money market funds in reserves, criticized as 'laying mines.'
Tech Giants' 'Tightening Noose'
Non-financial tech companies (e.g., Meta, Google) issuing stablecoins must pass the newly established 'Stablecoin Certification Review Committee' (SCRC) approval and meet data privacy and antitrust requirements. This clause is interpreted as a 'targeted strike' against Trump ally Musk's (X platform stablecoin plan).
Consumer Protection and Bankruptcy Priority
If the issuer goes bankrupt, stablecoin holders can prioritize redeeming assets, and reserves will not be included in bankruptcy property. However, Democrats point out that this clause is weaker than the traditional bank FDIC insurance mechanism, posing a 'frozen funds' risk.
Anti-Money Laundering and Transparency
Bringing stablecoin issuers under the jurisdiction of the (Bank Secrecy Act), mandating compliance with KYC, suspicious transaction reporting, and other obligations. However, the loophole lies in: decentralized exchanges (DEX) are not constrained, leaving a backdoor for illegal fund flows.
Presidential Family 'Exemption Loophole'
The bill does not explicitly prohibit congressional members or presidential relatives from participating in stablecoin businesses, allowing the USD1 stablecoin issued by World Liberty Financial (WLF), owned by the Trump family, to become compliant. Democratic Senator Warren angrily retorted: 'This is greenlighting Trump’s ‘crypto corruption’!'
Controversy Whirlpool: Trump's 'Crypto Gold Mine' and Bipartisan Fracture
The biggest obstacle to advancing the bill does not come from policy details, but rather from the conflicts of interest arising from the Trump family's deep involvement in the crypto industry. Three major points of controversy push the political game to a climax:
The 'Legalization Arbitrage' of USD1 Stablecoin
USD1 issued by WLF has injected $2 billion into Binance through the Abu Dhabi Investment Authority, and the Trump family could earn over $80 million annually through transaction fees. More critically, once the bill is passed, USD1 will automatically gain federal recognition, with market capitalization potentially soaring to the tens of billions.
'Pay-to-Meet' Moral Crisis
Trump provided 'presidential dinner' qualifications to holders through selling Meme coins (like TRUMP Coin), and Democrats accused him of 'securitizing national power.' Senator Jeff Merkley bluntly stated: 'This is the most naked quid pro quo in history!'
The 'Revolving Door' of Legislative and Executive Power
One of the core drafters of the bill, Republican Senator Hagerty, has been exposed for having political donation ties with WLF. The Democrats attempted to promote an amendment prohibiting public officials from participating in stablecoin businesses, but it was collectively blocked by Republicans.
Despite the two parties reaching a compromise on May 15 to remove clauses directly targeting Trump, Warren and others still launched a 'final struggle' in the Senate, demanding the disclosure of the Trump family's funding flows with WLF. This moral tug-of-war is essentially a precursor to the 2026 midterm elections.
Market Turbulence: Compliance Dividends and the 'Oligopoly Era'
If the (GENIUS Act) is ultimately implemented, it will trigger a structural reshuffle in the stablecoin market:
Top players 'lying down to win'
USDC (Circle) and USDT (Tether), having already established compliant reserves (80% in short-term U.S. Treasury bonds), will directly obtain federal licenses, further squeezing small to medium-sized issuers. Goldman Sachs predicts that their market share may rise from 94% to 98%.
Traditional Finance's 'Cross-Border Harvesting'
Institutions like JPMorgan and Wells Fargo have applied for 'limited purpose stablecoin licenses,' planning to erode cryptocurrency exchange shares through on-chain payment operations. The clause in the bill allowing insurance companies to issue stablecoins further opens the floodgates for traditional giants.
The 'Antidote or Poison' of the U.S. Treasury Crisis?
The bill requires stablecoin reserves to primarily consist of U.S. Treasury bonds, which may temporarily alleviate liquidity crises in U.S. Treasuries, but in the long run could exacerbate 'maturity mismatch' — investors prefer short-term bonds, leading to a decline in long-term U.S. Treasury demand, further worsening fiscal deficits.
The 'Domino Effect' of Global Regulation
The EU, UK, and Singapore have expressed their intention to adjust policies in reference to the (GENIUS Act), forming a 'U.S. Dollar Stablecoin Alliance.' The renminbi and yen stablecoins may be squeezed out of the cross-border payment market, reshaping the global currency landscape.
Future Battles: House Game and Trump’s 'Final Verdict'
Although the Senate has given the green light, the bill still needs to pass three hurdles:
House 'Streamlined Passage'
The Republicans control the House with a 220:215 majority and only need a simple majority (218 votes) to pass. However, the House version (STABLE Act) has key differences with the Senate, requiring regulatory power to be fully federal and prohibiting tech companies from issuing stablecoins. Coordination between the two chambers may drag until the August recess.
The President's 'Interest Trade-off'
Although Trump publicly supports the bill, his family's interests are deeply linked to the legislative details. If the Democrats push for an 'anti-corruption amendment' in the House, it may trigger a presidential veto, leading to legislative failure.
The 'Gray Rhino' of Judicial Challenges
The U.S. Constitution's 'Emoluments Clause' prohibits the president from profiting from foreign governments, and since 20% of USD1 users are located in sanctioned countries (Iran, North Korea), this could trigger Supreme Court intervention.
Conclusion: The 'Dollar Hegemony 2.0' of the Crypto Era
The ultimate ambition of the (GENIUS Act) is not merely to regulate the market, but to embed dollar hegemony into the DNA of blockchain. By tying U.S. Treasuries to stablecoins, the U.S. is creating a 'Digital Dollar Empire' — every on-chain transaction globally is invisibly reinforcing the dollar's reserve status. However, the risks of this gamble are equally immense: if DeFi (decentralized finance) bypasses compliant stablecoins, or if China accelerates the internationalization of the digital yuan, the bill may become a 'house of cards.'
The battle of politicians, the lobbying of interest groups, and the wave of technological revolution — at this historical crossroads, the ultimate fate of the GENIUS Act will determine who dominates the financial order of the next decade.
