Quick Summary
- U.S. Senate advances GENIUS Act with a 66-32 vote, moving it closer to final approval.
- Stablecoins to be overseen by banking regulators, not the SEC or CFTC.
- Issuers must be insured banks or licensed institutions, with a two-tiered regulatory structure.
- Strict AML rules and reserve transparency enforced, plus a bankruptcy framework protecting stablecoin holders.
- Overseas issuers must comply with U.S. standards or risk penalties up to $1M per infraction.
- Short-term ban on algorithmic stablecoins pending further risk evaluation.
What Is the GENIUS Act?
The Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025—or simply, the GENIUS Act—has taken a major leap forward as the U.S. Senate voted 66-32 to close debate and prepare for a final vote. Introduced by Senator Bill Hagerty in February 2025, this landmark legislation aims to give long-awaited regulatory clarity to stablecoins, potentially reshaping the crypto landscape in the United States.
Banking Oversight Takes the Lead
Rather than falling under the SEC or CFTC, stablecoins would now be treated as payment instruments, with banking regulators—like the OCC (Office of the Comptroller of the Currency)—taking control. Only:
- Insured banks
- Federally compliant state-licensed institutions
would be allowed to issue stablecoins.
The Act introduces a two-tier regulatory system:
- Under $10 billion: Can operate under state regulation.
- Over $10 billion: Must come under direct federal oversight.
Strong Protections & Restrictions
To build trust in the system, the bill includes:
- Anti-money laundering (AML) requirements
- Criminal penalties for misrepresenting reserves
- Bankruptcy protections prioritizing stablecoin holders
- A temporary ban on algorithmic stablecoins, awaiting U.S. Treasury risk assessment
Global Implications
In a bold move to cement U.S. leadership in the stablecoin space, the GENIUS Act also targets foreign issuers. They must either:
- Comply with U.S. regulations
- Or operate under regimes approved by the U.S. Treasury
Non-compliance could lead to $1 million penalties per violation and market exclusion.
Innovation vs. Enforcement
While the bill is widely praised for creating a path forward, critics argue it may stifle innovation for smaller startups and is weak on enforcement against bad actors abroad.
The Road Ahead
As the GENIUS Act nears its final Senate vote, it signals a pivotal shift in how the U.S. views digital currencies—balancing innovation with responsible regulation.
“This legislation is about giving America a leadership role in the future of money, without compromising on trust or security,” said Senator Bill Hagerty during the bill’s introduction.
Stay tuned: If passed, the GENIUS Act could become the foundation for stablecoin integration into the U.S. financial system.