On May 20, the U.S. GENIUS Stablecoin Act finally passed a motion to end debate on the GENIUS Stablecoin Act with a vote of 66 to 32, marking the official start of the bill review process, but the bill itself has not yet been passed.
What is the GENIUS Act?
The GENIUS Act (full name: "Guiding and Establishing National Innovation for US Stablecoins Act of 2025") is a bill introduced by US Senator Bill Hagerty on February 4, 2025, which aims to establish a federal regulatory framework for US payment stablecoins. The bill was co-sponsored by Senate Banking Committee Chairman Tim Scott, Senator Cynthia Lummis, and Democratic Senator Kirsten Gillibrand, reflecting the characteristics of bipartisan cooperation. The bill is based on the discussion draft released in October 2024 and draws on previous proposals such as Patrick McHenry's "Payment Stablecoin Clarity Act of 2023" and the Lummis-Gillibrand Payment Stablecoin Act.
Main content:
- Definition and classification: The bill clearly defines payment stablecoins as digital assets pegged to a fixed currency value (such as the U.S. dollar) and used primarily for payment and settlement. It stipulates that payment stablecoins are neither securities nor commodities, placing them under a special regulatory framework and limiting the power of agencies such as the SEC to treat them as securities.
- Issuance License: Only entities with federal or state licenses (such as depository institution subsidiaries, federally qualified non-bank issuers, or state qualified issuers) can legally issue stablecoins in the United States.
- Reserve requirements: Issuers must hold high-quality liquid assets (such as U.S. dollars, U.S. Treasury bonds or money market funds) as reserves in a 1:1 ratio and disclose the reserve composition and redemption policy on a regular basis.
- Regulatory layers:
- Issuers with a market capitalization of more than $10 billion are regulated by the Federal Reserve or the Office of the Comptroller of the Currency (OCC).
- Issuers with a market capitalization of less than $10 billion may be supervised by state regulators and may apply for an exemption from continued state regulation.
- Consumer Protection: The bill requires issuers to comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations, regularly audit and publicly disclose their financial status, and ensure that users have priority repayment rights in the event of issuer bankruptcy.
- Technical limitations: The bill tends to support stablecoins issued on public blockchains, while stablecoins issued on private or permissioned chains may not be considered “payment stablecoins” and therefore not subject to the bill’s regulatory or preferential policies.
- Restrictions on non-financial companies: The revised bill adds restrictions on non-financial listed companies (such as technology giants Meta and Amazon), prohibiting them from issuing stablecoins unless they meet strict standards to maintain the separation of banking and commerce.
Legislative progress:
- On March 13, 2025, the Senate Banking Committee passed the GENIUS Act by a vote of 18:6, showing bipartisan support.
- However, on May 8, 2025, the bill failed to pass a key procedural vote in the Senate (48 in favor, 49 against), failing to obtain the required 60 votes. Some Democrats withdrew their support due to insufficient anti-money laundering and national security provisions and the potential conflicts of interest brought about by the Trump family's crypto business.
- Republicans say there are still other procedural opportunities to push the bill back to the Senate for review, and a revised version is expected by the end of May 2025.
- On May 20, the GENIUS Stablecoin Act finally passed a motion to end debate on the GENIUS Stablecoin Act by a vote of 66 to 32, marking the official start of the bill review process, but the bill itself has not yet been passed.
Impact on the crypto industry
If the GENIUS Act is passed, it will have a profound impact on the crypto industry. The following is an analysis of both the positive and potential negative impacts:
Positive Impact
- Regulatory Clarity:
- The bill provides a clear legal framework for stablecoins, eliminating the long-standing regulatory uncertainty about whether stablecoins are securities or commodities. This will reduce compliance costs and attract more institutional investors and traditional financial institutions to enter the stablecoin market.
- For example, Dante Disparte, chief strategy officer at Circle (issuer of USDC), called the bill a “historic step forward” that would help the U.S. take a leading position in the global stablecoin market.
- Fostering innovation and adoption:
- The bill enhances user trust by setting transparent reserve requirements and consumer protection measures, which may promote the widespread use of stablecoins in payments, cross-border transfers, and decentralized finance (DeFi).
- Stablecoins are expected to compete with traditional credit card companies and revolutionize the payment industry due to their low cost and fast transaction speed.
- Support for US dollar hegemony:
- The bill encourages the development of dollar-pegged stablecoins, increasing demand for U.S. Treasuries and thus consolidating the dollar’s position as the global reserve currency.
- Attracting capital inflows:
- A clear regulatory environment may unlock on-chain capital flows for traditional financial institutions (such as Goldman Sachs and JPMorgan Chase) and promote the application of blockchain technology’s efficiency advantages (such as lower borrowing costs and fewer errors) in financial markets.
- Global Competitiveness:
- Compared to the EU’s MiCA regulations and stablecoin regulation in places like Dubai, the GENIUS Act will help the United States catch up and avoid falling behind China’s digital yuan or other countries in the field of digital assets.
Potential negative impact
- Challenges for Small Issuers:
- Stringent compliance requirements (e.g., reserve audits, AML/CTF compliance) may increase operating costs for small issuers, lead to market concentration in favor of large players, and inhibit innovation by new entrants.
- Restrictions of Tech Giants:
- The revised bill's restrictions on non-financial companies (such as Meta and Amazon) may hinder technology companies' innovation in the payment field and spark controversy over the separation of banking and commerce. Critics believe that this may protect traditional banks but limit consumer choices.
- Restrictions on non-USD stablecoins:
- The bill does not support stablecoins that are backed by other cryptocurrencies (such as algorithmic stablecoins), which may limit the development of the DeFi market and force related projects to reclassify tokens or restrict access to U.S. users.
- National Security and Money Laundering Risks:
- Some Democrats (such as Elizabeth Warren) are concerned that the bill's lack of anti-money laundering and national security provisions could provide opportunities for malicious actors (such as North Korean hackers). The TerraUSD crash in 2022 and the $1.5 billion theft of the Bybit exchange highlighted the potential risks of stablecoins.
- Impact on existing issuers:
- Non-compliant stablecoin issuers, such as Tether, may be forced to adjust their operations to comply with transparent reserve requirements or risk losing U.S. market share.
- Political and Conflict of Interest Disputes:
- The Trump family’s World Liberty Financial stablecoin project and its connection to Abu Dhabi investments have raised concerns among Democrats about potential conflicts of interest in the bill, which could further delay the legislative process.
Current Situation and Outlook
If the bill is eventually passed, it will bring landmark regulatory clarity to the U.S. crypto industry, attract institutional capital, promote the use of stablecoins in payment and DeFi, and consolidate the global status of the U.S. dollar. However, the strict requirements of the bill may lead to market concentration and restrict the development of small players and non-dollar stablecoins. In addition, political differences and disputes over the role of technology giants may continue to affect the legislative process.
For crypto industry participants, it is recommended to closely monitor the progress of bill revisions and actively cooperate with policymakers to ensure that the regulatory framework maintains flexibility for innovation while protecting consumers and national security.
