2025-03-14
The Senate Banking Committee has voted
18-6 in favor of a new bill to regulate payment stablecoins and advancing the
Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act in
an 18-6 vote.
The bill, called the GENIUS Act
(S.394), received support from all Republican members and some Democrats.
What the Bill Does?
The GENIUS Act sets rules for companies
that issue stablecoins, including: requiring licenses for stablecoin issuers, setting
reserve requirements to back stablecoins with real assets, and creating lighter
regulations for smaller stablecoin issuers.
Supporters say the bill will help the
U.S. stay competitive in financial technology.
Critics, like Senator Elizabeth Warren,
worry that it could allow criminals to bypass anti-money laundering laws and
hurt banks by encouraging people to hold money in stablecoins instead of bank
accounts.
Who Supports and Opposes It?
Supporters: Republicans,
some Democrats, and industry leaders like Circle (issuer of the USDC
stablecoin). They argue the bill provides clear rules for stablecoins.
Opponents: Some
Democrats and consumer protection groups, who believe it could create financial
risks and help big tech companies like Amazon and Meta enter the banking
industry.
Key Rules in the Bill
Who Regulates Stablecoins?
Stablecoin issuers with less than $10
billion in market value will be regulated by state authorities. Bigger issuers
will be overseen by federal agencies like the Federal Reserve.
Reserve Requirements
Stablecoins must be backed 1:1 by U.S.
dollars or highly liquid assets. Issuers must publish monthly reports on their
financial status.
Consumer Protection
Issuers must allow users to redeem
stablecoins quickly. Federal regulators can suspend licenses if companies don’t
follow the rules.
Preventing Crime
Stablecoin issuers must follow
anti-money laundering (AML) and know-your-customer (KYC) rules.
Political and Industry Reactions
The American Bankers Association
(ABA) hasn’t taken a clear stance but supports some parts of the bill, such
as repealing SEC rules that affected how banks handle digital assets.
Consumer groups worry the bill could increase
fraud and instability in financial markets.
Reports suggest that Trump’s allies,
including his Commerce Secretary, have ties to the crypto industry, raising
concerns about conflicts of interest.
What’s Next?
The House of Representatives is
considering similar bills. Some lawmakers, like Rep. French Hill (R-Ark.),
support a mix of state and federal regulation, while others, like Rep. Maxine
Waters (D-Calif.), want all stablecoin issuers regulated at the federal level.
The GENIUS Act still needs at least 60
votes in the Senate to move forward, meaning both parties must cooperate to
pass it into law.
In order for a bill to become a law, it
must be approved by both Houses of Congress.