US Senate Moves Closer to Regulating Stablecoins with GENIUS Act
In a notable turn of events, the US Senate has officially taken up the GENIUS Act, a landmark bill that would establish a federal regulatory framework for stablecoins — digital assets pegged to the value of the US dollar.
In a 66–32 vote on Monday, May 19, the bill cleared the procedural hurdle of cloture, allowing for full debate and consideration of amendments on the Senate floor. This is a positive sign that lawmakers are seriously considering bringing stablecoins into the regulatory fold to increase transparency and protect consumers.
Tighter Regulations for Stablecoin Issuers
Proposed by Senator Bill Hagerty (R-Tennessee), the GENIUS Act would require stablecoin issuers to:
Maintain adequate reserves of cash or other highly liquid assets.
Conduct regular audits.
Adhere to additional standards if the value of tokens in circulation exceeds $50 billion.
Subject to increased oversight, especially for issuers based overseas.
The bill is expected to reduce financial risks and prevent abuses in the stablecoin space, which is growing rapidly but lacks a clear regulatory framework.
A political shift after behind-the-scenes negotiations
Just two weeks earlier, on May 8, the bill had failed to pass the floor by a vote of 48–49, due to opposition from several Democratic senators. Concerns include:
Lack of consumer protections.
Lack of accountability from issuers.
Exemption from ethics rules for former President Donald Trump — a known cryptocurrency supporter and affiliated with World Liberty Financial, an organization that recently launched a USD-pegged stablecoin.
However, after behind-the-scenes negotiations, Punchbowl News reported that some Democrats agreed to return to support the bill after making concessions on:
Improving ethics regulation in big tech.
Strengthening consumer protections.
Reducing conflicts of interest on the bill’s drafting committee.
A new provision was also included, ensuring that the ethics rules would apply to “regular and special government employees, including Elon Musk.” However, Donald Trump’s exemption continues to be controversial, particularly from Senator Elizabeth Warren (D-Mass.), who criticized that “this bill is worse than no law at all.”
GENIUS bill moves toward final vote
After Monday’s vote, former opponents like Senators Ruben Gallego (AZ), Mark Warner (VA), Lisa Blunt Rochester (PA), Angela Alsobrooks (MD), and Kirsten Gillibrand (NY) all reversed course and supported it.
The bill passed the Senate Banking Committee on March 13, and although the current version no longer has a Democratic sponsor, it still has bipartisan support.
If approved after a final vote — which could take place later this week — the GENIUS Act would become one of the first clear federal legal frameworks governing how stablecoins are issued and managed in the United States, paving the way for more transparent and secure development of digital asset markets.
