In a groundbreaking decision on June 17, the U.S. Senate approved the GENIUS Act, marking the first major federal effort towards regulating the crypto sector, particularly focusing on stablecoins used for payments. This significant legislative step, which passed with a 51-23 vote, now heads to the House of Representatives. The House had earlier moved a separate stablecoin bill through committee stages, underscoring the urgency and importance of developing a regulatory framework in this digital currency space.
What Are the Core Provisions of the GENIUS Act?
Following extensive negotiations and discussions, the GENIUS Act clearly delineates rules that stablecoin issuers must adhere to, notably requiring that their digital currencies are backed by U.S. dollars or equivalent liquid assets. Significant issuers with over $50 billion in market value are mandated to undergo annual audits, and foreign issuers must meet similar standards. Notably, it grants crypto holders “super-priority creditor” status should an issuer face bankruptcy.
Who Faces Restrictions and Why?
The act specifically places restrictions on public companies such as Meta and Amazon in issuing stablecoins unless they adhere to established financial risk management and consumer privacy standards. This reflects ongoing tensions and lobbying by traditional financial entities keen to restrict non-bank institutions from heavily influencing the stablecoin landscape.
The involvement of entities tied to former President Donald Trump deepens concerns about possible conflicts of interest, especially as World Liberty Financial—a company linked to Trump—plans its own financial ventures during ongoing Senate discussions.
As debate continues, the House of Representatives faces pressure to incorporate the GENIUS Act into its existing stablecoin legislation or potentially align it with a broader market regulation framework. With Trump expressing support for the act, there’s momentum to align legislative priorities across chambers by August.
– The GENIUS Act requires stablecoin assets to be dollar-backed.
– Issuers exceeding a $50 billion market cap must have annual audits.
– Increased regulation for foreign and large-scale public company issuers.
– Will move to the House, with Trump’s administration expressing support.
The GENIUS Act reflects growing bipartisan recognition of the need to regulate digital currencies while safeguarding the interests of both issuers and consumers. As the House deliberates, the act’s future could usher in a new era of oversight in the cryptocurrency market, balancing innovation with security and consumer protection.
