The Senate Passes the GENIUS Act for Stablecoin Legislation

The Senate’s approval of the GENIUS Act represents a significant milestone in the regulation of stablecoins, as it’s the first time such legislation has been passed by one chamber of Congress. The bipartisan vote was 68-30, with 18 Democrats supporting the bill.

Next Steps for the GENIUS Act

The bill now needs to be approved by the House of Representatives. If both chambers agree, it could eventually become law. However, there are still discrepancies between the Senate’s version and the House’s STABLE Act.

Impact on the Crypto Industry

The regulation of stablecoins in the U.S. could have far-reaching effects, particularly since about 97% of stablecoins are denominated in U.S. dollars. This could influence global crypto markets and attract attention from international entities like Europe’s Société Générale, which is launching a U.S.-dollar-backed stablecoin.

Details of the GENIUS Act

The act establishes federal standards for the issuance, trading, and custody of stablecoins. Permitted Payment Stablecoin Issuers will operate under a federal framework while still allowing state supervision. This clarity is expected to benefit financial institutions and large entities.

Each stablecoin must be fully backed by U.S. dollar reserves, verified through monthly audits, ensuring investors’ safety and market stability. Additionally, all issuers are required to comply with anti-money laundering and Know Your Customer regulations.

Potential for Major Stablecoins

Reports suggest that Walmart and Amazon are considering the development of their own stablecoins under this legal framework. The GENIUS Act aims to provide a clear path to compliance, making it easier for various entities to enter the market.

Future Considerations

While the House’s STABLE Act and the Senate’s GENIUS Act have some differences, especially regarding yield-bearing stablecoins and issuer authorization, reconciliation efforts could lead to a unified framework. This would mark a significant advancement in regulating stablecoin issuance.

“This shows real momentum,” James Wester from Javelin Strategy & Research stated. “We are moving from the debate on whether stablecoins will be regulated to how they should be regulated.” The successful reconciliation of these acts could establish a framework for compliant bank-issued, fintech-issued, and platform-issued stablecoins.

Wester added that it’s long overdue and indicates progress in stabilizing the crypto industry through federal regulation.