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REGULATION
by
2 months ago

Senate Banking Committee advances stablecoin bill

2025-03-14

REGULATION
by
2 months ago

 

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.

 

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