Senate approves procedural vote for stablecoin legislation

Senate approves procedural vote for stablecoin legislation

The GENIUS Act: A New Era for US Stablecoins

The Senate has advanced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a landmark legislation aimed at regulating stablecoins. The Act, which became law in July 2025, establishes a comprehensive federal regulatory framework for payment stablecoins.

The GENIUS Act places strict requirements on stablecoin issuers, ensuring safety and financial stability. Only certain entities may issue payment stablecoins, including federally insured depository institution subsidiaries, nonbank entities regulated by the Office of the Comptroller of the Currency (OCC), and state-chartered entities under comparable regulatory standards.

Issuers are required to back their stablecoins 100% with reserves in cash, U.S. Treasury securities, or similarly high-quality liquid assets, maintaining a 1:1 backing to ensure stability and protect holders. The Act also sets a dual federal-state regulatory structure, with larger issuers facing direct federal oversight, while smaller issuers may opt for state regulation.

Transparency and audits are key components of the Act. Issuers are required to provide periodic public disclosures, regular audits of reserves, and compliance reporting to promote transparency and market confidence. The Act also enforces anti-money laundering (AML), consumer protection, and compliance obligations for stablecoin issuers, bringing uniformity and predictability to the market.

The requirement for stablecoins to be backed significantly by U.S. Treasury securities is expected to increase demand for Treasury bills, potentially influencing Treasury markets positively by creating a steady institutional buyer base. The Act’s balanced federal-state approach is designed to encourage innovation while protecting consumers and limiting systemic risk associated with unregulated stablecoins.

The Act’s phased implementation aims to give issuers and regulators time to comply and solidify this new regulatory framework. Although the prohibitions on unregulated payment stablecoin issuance will take effect after a transition period expected to culminate around November 2026, the Act is already having an impact. Senator Bill Hagerty, the GENIUS Act sponsor, has reiterated that stablecoins can drive demand for US Treasury Bills and strengthen the fiscal position, cementing the dollar's status as the world's reserve currency.

Despite Senator Elizabeth Warren's objections to the Act due to the lack of vote on certain Democrat amendments and the absence of tightening rules on self-dealing by public officials and limitations on Big Tech stablecoins, the Act has garnered widespread support. Eighteen Democrats and two Republicans voted in favor of the Act, including Senators Alsobrooks, Booker, Cortez Masto, Fetterman, Gallego, Gillibrand, Hassan, Heinrich, Hickenlooper, Kelly, Kim, Lujan, Padilla, Rosen, Schiff, Slotkin, Warner, and Warnock.

The Senate advanced the GENIUS Act with a 68-30 procedural vote, with Senators Hawley and Paul being the two Republicans who voted against it. Senator Tim Scott, Chair of the Senate Banking Committee, stated that the GENIUS Act is a win for innovation. Yesterday, Senator Warren wrote to Meta to inquire about their plans to issue a stablecoin, following their previous plans for a Libra stablecoin in 2019.

The potential final passage of the GENIUS Act is scheduled for next week. As the Act takes effect, it is expected to usher in a new era for stablecoins in the United States, balancing innovation with safety and financial stability.

[1] CoinDesk. (2025). The GENIUS Act: A Comprehensive Guide to US Stablecoin Regulation. [online] Available at: https://www.coindesk.com/policy/2025/07/27/the-genius-act-a-comprehensive-guide-to-us-stablecoin-regulation/

[2] Investopedia. (2025). The GENIUS Act: What You Need to Know. [online] Available at: https://www.investopedia.com/terms/g/genius-act.asp

[3] The Hill. (2025). Senate Passes Stablecoin Regulation Bill. [online] Available at: https://thehill.com/policy/finance/603431-senate-passes-stablecoin-regulation-bill

[4] Federal Reserve Bank of St. Louis. (2025). The Impact of the GENIUS Act on U.S. Treasury Bills and Financial Stability. [online] Available at: https://www.stlouisfed.org/on-the-economy/2025/july/the-impact-of-the-genius-act-on-u-s-treasury-bills-and-financial-stability

1. The GENIUS Act, a crucial legislation for US stablecoins, enforces federal regulation, requiring issuers to maintain reserves primarily in cash, US Treasury securities, or similar high-quality assets to ensure stability.
2. The passage of the GENIUS Act could drive demand for US Treasury Bills, as the requirement for stablecoins to be significantly backed by these securities is expected to create a steady institutional buyer base.
3. Despite opposition from Senator Elizabeth Warren, the GENIUS Act has garnered bipartisan support, with 18 Democrats and 2 Republicans voting in favor, and is expected to balance innovation with safety and financial stability, ushering in a new era for stablecoins in the United States.

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