Stablecoin bill creates protections for crypto users, critics say it's not enough
June 25 (UPI) -- After passing the Senate via cloture, the Guiding and Establishing National Innovation for U.S. Stablecoins Act faces a vote in the U.S. House in the coming weeks.
Proponents of the bill establishing regulations for payments with stablecoins say it is the first step in establishing protections for businesses and consumers while opponents say it lacks important guardrails.
Stablecoin, a form of cryptocurrency that is backed by a more stable asset, such as a currency like the U.S. dollar or a commodity like gold, is designed to maintain a stable value. The GENIUS Act creates legal guidelines for licensing stablecoin issuers and oversight mechanisms to regulate banks and other financial institutions dealing in stablecoins.
Sen. Bill Hagerty, R-Tenn., sponsored the bill in the Senate. He said on the Senate floor that passing the act will improve the speed and efficiency of payment with stablecoins around the globe while creating safeguards to deter illicit activity.
"Stablecoins also advance a vital national interest by driving demand for U.S. Treasuries. A recent report forecasts that with a well-crafted U.S. regulatory framework, stablecoin issuers could become one of the top holders of U.S. Treasuries by the end of this decade -- if not sooner," Hagerty said. "This would strengthen our fiscal position and cement the dollar's status as the world's reserve currency. If we fail to act now, not only will these benefits slip away. Without a regulatory framework, stablecoin innovation will proliferate overseas -- not in America."
Christian Catalini, founder of the Massachusetts Institute of Technology's Cryptoeconomics Lab, told UPI that the GENIUS Act will lower the cost of making payments with stablecoin internationally.
"It is much needed legislation that will unlock a safer and more scalable stablecoin ecosystem," Catalini said. "It will lead to entry by many more issues, increasing competition among stablecoins."
Beginning three years after the GENIUS Act is enacted, it will be illegal to offer or sell a payment stablecoin to anyone in the United States without a permit. It will also be illegal for foreign service providers to issue or make a stablecoin available in the United States without complying with U.S. guidelines. This includes demonstrating compliant technological capabilities.
Those who violate the GENIUS Act would be subject to fines of up to $1 million and five years in prison for each violation.
The bill dictates the requirements for becoming a stablecoin issuer. Among these requirements, the issuer must have the capital to support the stablecoins they are issuing.
Issuers will be required to submit reports upon request detailing their financial condition, their system for monitoring and controlling financial and operating risks and compliance with the Bank Secrecy Act and other laws and sanctions implemented by the Secretary of the Treasury.
Nonbank entities, such as fintech companies, will be able to apply for licensing to issue stablecoins.
Fifty Republicans and 18 Democrats voted to end debate over the bill in the Senate, allowing it to advance. Catalini said it garnered some bipartisan support due to the significance of stablecoin.
"The technology is likely to be ultimately as impactful as the Internet," he said. "Countries that will create the best environment for it will lead for decades to come."
Sen. Elizabeth Warren, D-Mass., voted against ending debate, arguing that the bill does not do enough to stop government officials, such as President Donald Trump, from engaging in corruption with the use of cryptocurrency.
Trump and first lady Melania Trump each launched new meme coins hours before Inauguration Day.
Sen. Mark Warner, D-Va., was among the Democrats to support the bill. In a statement, he said concerns remain about how Trump and his family have used crypto technologies to "evade scrutiny." However, he does not believe this should deter from passing the regulations in the GENIUS Act.
"We must remain vigilant in exposing and stopping these abuses," Warner said. "But our outrage over that corruption cannot prevent us from building a foundation for responsible innovation in this space. If we don't lead, others will, and not in ways that reflect our interests or democratic values."
Independent Community Bankers of America expressed concerns with the GENIUS Act in a letter to the Senate last month. Chief among those concerns was language that it believed would allow non-bank issuers to obtain Federal Reserve Master Accounts. The current version of the bill has addressed that language, according to the ICBA.
"On behalf of the nation's community bankers, ICBA appreciates the work by the Senate to address concerns raised by ICBA with the GENIUS Act throughout the legislative process in order to provide regulatory clarity while protecting against the negative economic consequences that would result from community bank disintermediation," Rebeca Romero Rainey, ICBA president and CEO, said in a statement.
Catalini said that he expects more regulations to follow due to Trump's support of cryptocurrency.
"We need new rules for market infrastructure, tax treatment and more," he said. "No bill is perfect but the GENIUS Act is an important first step in ensuring consumers and businesses are appropriately protected when paying for holding a balance in stablecoin."
Sen. Josh Hawley, R-Mo., and Sen. Rand Paul, R-Ky., voted against ending debate on the bill. They did not respond to requests for comment.
Copyright 2025 UPI News Corporation. All Rights Reserved.
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