The United States Senate is on the verge of making a landmark decision with an impending vote on the GENIUS Act, set for June 17. The proposed legislation is designed to forge a regulatory path for stablecoins, both domestically and internationally. An announcement on Thursday from the Democratic Party confirmed the finalized date, highlighting the collaboration between the Majority Leader and the Democratic Leader in determining the vote schedule. This legislative move holds potential ramifications for the stablecoin market, stipulating backing by the U.S. dollar or equivalent liquid assets, implementing oversight over major issuers, and drawing up compliance guidelines for foreign companies in the stablecoin space.
What Does the GENIUS Act Entail?
The GENIUS Act proposes critical regulations aimed at integrating stablecoins safely into the U.S. financial sphere. A crucial element mandates that stablecoin issuers back their digital currencies with either U.S. dollars or assets with comparable liquidity. This ensures stability and credibility within these financial projects.
Moreover, stablecoin issuers with valuations above $50 billion are required to undergo annual audits by independent bodies. Designed to foster market transparency and trust, this clause also extends to international entities like Tether (USDT), which holds significant stakes in the global stablecoin market.
How Will the Legislative Process Proceed?
Following a preliminary Senate vote, the GENIUS Act now advances to a decisive vote. Should it pass, it will move to the House of Representatives where it must navigate the differences with its own stablecoin bill, the STABLE Act.
Key divergences between the Senate’s bill and the House’s version, notably the regulation level and approach towards foreign issuers, will need harmonization. The initiative is further propelled by President Donald Trump’s support for selling the bill before August.
Treasury Secretary Scott Bessent noted this week that effective regulation could see the market for U.S. dollar-backed stablecoins surpass $2 trillion by 2028, against a current market size of $252 billion.
The Senate’s decision on the GENIUS Act signifies a pivotal moment for the stablecoin sector. The subsequent integration of this legislative framework could reshape financial compliance standards significantly.
