On June 17, 2025, the U.S. Senate passed, by a vote of 68-30, the "Guiding and Establishing National Innovation for U.S. Stablecoin Act" (The Genius Act or S. 1582, as amended). The Genius Act seeks to create a regulatory framework for stablecoins that track the value of an underlying asset, such as the U.S. Dollar.
Provisions of the GENIUS Act
The GENIUS Act would create many regulations and rules related to stablecoins and their use. This includes standards on the issuance and payment of stablecoins, such as a requirement that a "permitted payment stablecoin issuer" maintain at least a 1 to 1 basis of United States currency, treasury bills, or other reserves with the stablecoin issued. Some additional notable provisions include:
- establishment of defined federal and state regulatory roles for stablecoins, with issuers of coins with over $10 billion in market capitalization to be subject to federal oversight;
- requirements that permitted payment stablecoin issuers be treated as a financial institution for purposes of the Bank Secrecy Act and related Federal laws applicable to financial institutions located in the United States;
- prohibition from members of Congress and their families from profiting from stablecoins;
- enabling criminal penalties for failure to report certain information, as well as monthly certification and examination requirements by a registered public accounting firm;
- enacting an approval process to become a stablecoin issuer, which considers several factors, such as the financial condition of the potential issuer, whether the issuer has been involved in insider trading, embezzlement, money laundering, or related crimes, and other factors.
In addition to the new rules sought to be promulgated by the legislation, many experts in the area believe that increased regulation of stablecoins will entice companies to issue new stablecoins. Currently, the two most prominent stablecoins are USDC and USDT, which are issued by Circle and Tether, respectively. The impact of the legislation on the cryptocurrency market would be significant. The stablecoin market currently sits at approximately $250 billion.
Background on Stablecoins
Stablecoins are a type of cryptocurrency that seeks to mirror the value of another asset. This includes the U.S. dollar, other fiat currencies, or commodities such as gold. As such, stablecoins are generally viewed as less volatile than other forms of cryptocurrency. Because of this, stablecoins have gained popularity in financial markets, including emerging markets in Central and South America, to counteract currency instability and aid in cross-border transactions.
Next Steps and Reception of the Bill
The GENIUS Act now heads to the U.S. House of Representatives for consideration. Noting the strong support in the U.S. Senate and warm reception by prominent individuals in the cryptocurrency industry, such as Coinbase and Circle, the largest U.S. stablecoin issuer, many believe the tides have turned within Congress for passing legislation into law.
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