Crypto Industry Gains Ground as GENIUS Act Stablecoin Legislation Advances in Senate
By Jennifer Schonberger, Senior Reporter
May 20, 2025
In a significant development for the cryptocurrency market, the Senate has successfully passed a pivotal procedural vote concerning the GENIUS Act, a piece of legislation aimed at regulating stablecoins. This advancement positions the bill for a potential final vote within the week, marking a notable victory for the crypto industry amidst ongoing debates in Congress.
Political Dynamics Surrounding the Bill
Despite the achievement, the bill faces opposition, notably from some Democratic senators, including Elizabeth Warren of Massachusetts. During the Senate’s discussion on Monday, Warren raised concerns about the legislation’s potential implications, arguing that it does not prevent individuals like former President Trump and his family from profiting from stablecoin ventures. She further emphasized the need for more robust protections to ensure the stability of the financial system.
Nonetheless, support for the bill has emerged from key Democratic figures, including Senators Kirsten Gillibrand of New York and Angela Alsobrooks of Maryland. They, along with Senators Mark Warner of Virginia and Ruben Gallego of Arizona, helped rally sufficient backing to keep the legislation on track, despite the dissent from Warren and her supporters.
Understanding Stablecoins and Regulatory Measures
Stablecoins are cryptocurrencies designed to maintain a stable value by pegging them to other assets, such as the U.S. dollar. Unlike traditional bank accounts, however, these digital currencies do not benefit from deposit insurance. The GENIUS Act would impose strict reserve requirements requiring stablecoin issuers to maintain one-to-one reserves in cash or cash equivalents. Notably, the bill prohibits stablecoin accounts from offering interest to depositors, a provision favored by banking lobbyists to protect traditional financial institutions.
This bill comes in the wake of concerns over past unregulated practices, notably the collapse of the algorithmic stablecoin Terra Luna in 2022, which resulted in the loss of approximately $60 billion in value within a mere 72 hours. Advocates for the GENIUS Act argue that regulatory measures are necessary to prevent such situations from reoccurring.
Key Provisions of the GENIUS Act
The key provisions of the GENIUS Act include:
-
Strict Reserve Requirements: Ensures that stablecoin issuers maintain liquidity by holding reserves equivalent to the total number of stablecoins in circulation.
-
Public Disclosure: Issuers would be required to make monthly public disclosures regarding their reserve holdings, enhancing transparency for consumers and regulators alike.
-
Regulatory Oversight: Issuers with a total issuance of $50 billion or more must submit annual audited financial statements to authorities, demonstrating compliance with federal regulations.
-
Consumer Protection Laws: The act reinforces existing consumer protection laws and ensures they apply to stablecoin transactions.
-
International Compliance: The legislation also targets foreign stablecoin issuers, requiring them to adhere to the same rules as domestic entities, thereby closing loopholes that could facilitate regulatory evasion.
-
Ban on Non-Compliant Issuers: The Treasury secretary would hold the authority to delist any foreign issuer not compliant with U.S. regulations, ensuring a level playing field for all market participants.
Next Steps for the GENIUS Act
The Senate’s ongoing discussions will allow senators to propose amendments to the bill. To advance to a final vote, the legislation will require a majority of 60 votes to invoke cloture. Observers note that this legislative push highlights a broader trend towards regulating the fast-evolving cryptocurrency landscape while addressing concerns about consumer safety and financial stability.
As the debate continues, the implications of the GENIUS Act could set significant precedents for the future of cryptocurrencies in the United States, shaping the way stablecoin transactions are conducted and regulated.
For further updates, stay tuned as the Senate prepares for further discussions and votes regarding this potentially transformative legislation.
Share this article:
