The U.S. Senate delivered a watershed moment for cryptocurrency yesterday. Lawmakers overwhelmingly approved the GENIUS Act, the first major digital asset legislation ever to clear the chamber. Significantly, this bipartisan 68-30 vote marks a dramatic shift after years of Democratic roadblocks. The bill now advances to the House of Representatives for consideration.
A surge of Democrats joined Republicans on Tuesday, creating this historic majority. Furthermore, this strong bipartisan support provides crucial momentum. The Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (GENIUS) Act targets stablecoins. These are digital tokens pegged to traditional assets, primarily the U.S. dollar. Major examples include USDC and USDT.
Setting Rules for the Digital Dollar
The GENIUS Act establishes the first federal regulatory framework for stablecoins. Primarily, it imposes strict requirements on U.S. issuers. Companies like Circle, Ripple, and Tether must comply if serving U.S. users. Crucially, they must hold cash and short-term U.S. Treasuries backing tokens 1:1. This ensures full redemption rights for holders.
Additionally, the bill mandates rigorous transparency. Issuers must publicly disclose reserve compositions monthly. Strong anti-money laundering (AML) compliance and regulatory supervision are non-negotiable. New capital rules will likely follow. Moreover, the bill prioritises consumer protection during issuer bankruptcies. Stablecoin holders get repayment priority over other creditors.
Critics Voice Concerns
Crypto leaders hailed the Senate vote as transformative. Ji Kim, Acting CEO of the Crypto Council for Innovation, called it a “historic step forward”. Similarly, Amanda Tuminelli of the DeFi Education Fund labelled it “a win for the U.S.” and “a monumental step.” They believe this provides long-sought regulatory clarity.
However, the bill faced notable opposition. Senator Elizabeth Warren remains a vocal critic. She argues the legislation contains dangerous loopholes for foreign tokens like Tether. Warren also cites unresolved conflicts involving President Trump’s personal crypto ventures. Furthermore, she worries about tech giants like Amazon potentially issuing coins. Senator Josh Hawley opposed it over Big Tech influence concerns. On the other hand, illicit finance risks persist; stablecoins facilitate over 60% of illegal crypto transactions, TRM Labs reports.
Key Provisions and Ethical Safeguards
The legislation includes several critical guardrails. Firstly, it prohibits stablecoins offering consumer interest (yield-bearing). Secondly, it restricts non-financial companies like Meta or Amazon. They can only issue stablecoins through regulated partners or after specific committee approval. This addresses monopoly fears.
Ethical provisions are also prominent. The GENIUS Act bans active members of Congress and senior officials from issuing stablecoins. Importantly, an amendment requires disclosure of stablecoin holdings exceeding $5,000 by these officials. Foreign issuers face strict rules too. They must operate in jurisdictions meeting U.S.-approved AML and counter-terrorism standards.
Path Forward in the House
Attention now shifts to the House of Representatives. The GENIUS Act’s future there is uncertain. House lawmakers face choices. They could vote on the Senate bill as written. Alternatively, they might pursue amendments, requiring further Senate negotiation. Either way, President Trump is expected to sign it if passed.
Simultaneously, the House is crafting its own stablecoin bill, the STABLE Act. This version proposes different regulatory oversight, splitting authority. Reconciling these bills could cause delays. Moreover, the GENIUS Act links closely to the broader House Digital Asset Market Clarity Act. Industry advocates insist both laws are essential and must pass together.
Senator Bill Hagerty (R-TN), the GENIUS Act sponsor, emphasised the global stakes. “With this bill, the United States is one step closer to becoming the global leader in crypto,” he declared before Tuesday’s vote. Pegging stablecoins securely to the dollar reinforces U.S. financial dominance. Ultimately, this Senate breakthrough signals a new chapter for American crypto regulation after years of gridlock.
Written By Fazal Ul Vahab C H
