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The Senate of the United States of America voted 68 to 30 in support of the GENIUS Act, marking one of the first steps in regulating digital currencies. The bill aims to provide a regulated path for U.S. dollar-backed stablecoins, formally known as the Guiding and Establishing National Innovation in U.S. Stablecoins Act. The legislation requires that issuers reserve all assets, conduct monthly audits, and be overseen by the U.S. Treasury Department.
Senator Bill Hagerty, who sponsored the bill, added that the legislation encourages financial innovation while providing safety nets. The bill also restricts stablecoins that can pay interest to individuals and anchors regulatory powers under the Treasury, rather than the Federal Reserve.
Promoters of this strategy believe it will bring innovation to payment systems and solidify the dollar as the primary currency in digital payments. The bill has now been passed to the House of Representatives and will be viewed together with the STABLE Act. If the two houses come up with the same proposals, the bill will be sent to the President for final approval.
The legislation, although supported by both parties, was opposed by a number of Democratic politicians who expressed concern regarding the lack of precaution. Senator Elizabeth Warren termed the bill "thin regulation" and cautioned that it would open the country to financial exploitation by companies and politicians. According to her, the absence of anti-corruption regulations might lead to future economic shortages.
An amendment presented by Senator Jeff Merkley was to prevent existing presidents and their families from launching stablecoins. The proposal, however, has been defeated by Republican senators. The bill was also condemned by Senate Majority Leader Chuck Schumer, who stated that it did not offer a comprehensive response to ethical risks. Nevertheless, there were Democrats who voted in favor of the bill owing to its measures in consumer protection and financial management.
Crypto-backed super PACs had lobbied heavily to pass the bill. These organizations used an estimated $250m in the 2024 electoral cycle. They supported 58 candidates, of whom 53 were victorious, providing the industry with an impetus to influence policy.
The GENIUS Act may facilitate the movement of billions of dollars' worth of digital assets into officially regulated financial systems, as the USDC markets produced by Circle continue to expand. A vote in the House could come later this month, which would put the US ahead of other countries in terms of regulating stablecoins globally.
