Senate Pushes GENIUS Act to Regulate Stablecoins
The U.S. Senate Banking Committee has taken a major step toward stablecoin regulation. Lawmakers approved the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) in an 18-6 vote. This bill, introduced by Senator Bill Hagerty (R-TN), sets a federal framework for stablecoins.
Bipartisan support played a role, with five Democrats backing the bill. However, several proposed amendments, especially from Senator Elizabeth Warren (D-MA), were rejected. She argued that the bill lacked strong anti-money laundering and sanctions enforcement provisions. Despite opposition, the GENIUS Act moves forward, inching closer to a full Senate vote.
Why the GENIUS Act Matters for Stablecoins
Stablecoins have become a critical part of the financial system. They are digital assets designed to maintain a fixed value, usually tied to the U.S. dollar. With their growing popularity, lawmakers are pushing for clear rules and consumer protections.
The GENIUS Act aims to bring order to the stablecoin market. It introduces rules that ensure stablecoins are backed by real reserves. This measure prevents risky issuances that could harm the economy. Senator Tim Scott (R-SC) compared stablecoins to “traveler’s checks on the blockchain”, highlighting their need for proper oversight.
If passed, the act will help the U.S. maintain leadership in crypto innovation. By setting clear guidelines, it can attract more investment and encourage regulated growth in the industry.
GENIUS Act Faces Resistance from Democrats
While the GENIUS Act gained bipartisan support, Senator Elizabeth Warren and other Democrats raised serious concerns. Warren strongly opposed the bill, warning that it could enable money laundering and terrorist financing.
She pushed for amendments that would limit stablecoin issuance to traditional banks, but the committee rejected her proposals. She also claimed that the bill could benefit foreign adversaries like Iran, North Korea, and Russia by making it easier to evade sanctions.
Senator Catherine Cortez Masto (D-NV) also voiced skepticism. She acknowledged the bill as a good starting point but said it was not ready for final approval. Despite these objections, the bill advanced with Republican backing.
GENIUS Act Tightens Stablecoin Rules
In response to criticism, Senator Bill Hagerty announced stricter regulations within the bill. On March 10, he introduced new provisions, including:
- Tougher reserve requirements to ensure stablecoins are backed 1:1.
- Stronger anti-money laundering safeguards.
- Measures to prevent terrorist financing.
- Transparency rules for issuers to manage financial risks.
- Sanctions compliance measures to block illicit transactions.
These changes aim to address concerns from lawmakers while keeping stablecoin innovation on track. Some industry experts believe the revisions will favor U.S. firms over foreign competitors. This could strengthen the role of American stablecoins in global markets.
What’s Next ?
The GENIUS Act now moves to a full Senate vote, though the exact date remains unclear. If passed, it must also clear the House of Representatives before reaching President Donald Trump’s desk.
The crypto industry is watching closely. Many banks and fintech companies are already developing stablecoins to prepare for future regulations. If the GENIUS Act becomes law, it could set the stage for stablecoin integration into the traditional financial system.
With Washington’s growing focus on crypto, the coming months could be pivotal for stablecoin regulation. The GENIUS Act’s success or failure will shape the future of digital finance in the U.S.
