Circle celebrates enactment of GENIUS Act, establishing new stablecoin regulations
Will the GENIUS Act push stablecoins into mainstream finance, or will Tether struggle to meet transparency and reserve requirements under the new U.S. regulatory framework?
Stablecoins get a rulebook
For the first time in U.S. history, a stablecoin regulatory framework is on the verge of becoming law.
On March 13, the Senate Banking Committee advanced the Guiding and Establishing National Innovation for U.S. Stablecoins Act. The bill aims to set clear rules for stablecoin issuers at both the federal and state levels.
The bill was introduced on Feb. 4 by Senator Bill Hagerty (R-TN), who framed it as essential for keeping the U.S. competitive in the global financial arena. As other nations modernize their payment systems, Hagerty made it clear that the U.S. “cannot be left behind.”
Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) also backed the bill. A committee approved it with an 18-6 bipartisan vote.
It now moves to the full Senate for a floor vote. If approved, it will head to President Donald Trump’s desk for signing—potentially becoming the first stablecoin-specific regulatory framework in the U.S.
But what exactly does this bill entail, and what does it mean for the future of stablecoins in the U.S.? Let’s dive in.
Decoding the bill
The GENIUS Act introduces a structured approach to regulating U.S. stablecoins. It sets clear rules on:
- Who can issue them
- How they must be backed, and
- What safeguards are in place to protect consumers
Instead of a one-size-fits-all approach, the bill differentiates between smaller and larger stablecoin issuers based on market capitalization.
Issuers with less than $10 billion in market cap fall under state-level oversight, granting them more operational flexibility while still adhering to financial laws.
Once an issuer surpasses the $10 billion threshold, it transitions to direct supervision by the Federal Reserve and the Office of the Comptroller of the Currency, the same regulators that oversee major banks.
The tiered regulatory model ensures that the largest players, which have the potential to influence the broader financial system, face stricter scrutiny while allowing smaller issuers room to grow under state jurisdiction.
Another critical aspect of the bill is its emphasis on transparency and reserve backing. Stablecoins are designed to maintain a fixed value, often pegged to the U.S. dollar, but for that to work, issuers need to prove they actually hold the reserves they claim.
The GENIUS Act enforces monthly liquidity reports, compelling issuers to disclose financial details regularly. Additionally, all stablecoins must be backed one-to-one by U.S. dollars or highly liquid assets, ensuring that every token in circulation corresponds to a real, available asset.
The provision is intended to eliminate the uncertainty that arose in past controversies where stablecoin issuers were suspected of lacking sufficient reserves, leading to market instability.
Redemption rights and consumer protection have also received heightened attention under the bill. Stablecoin holders must have the ability to redeem their tokens for cash on demand, and issuers are legally bound to honor these requests without delay.
To reinforce accountability, the Federal Reserve and the OCC hold the authority to suspend licenses or impose penalties on issuers failing to meet these obligations.
These enforcement measures act as a safeguard against fund mismanagement and ensure that issuers remain responsive to consumer needs, particularly during market fluctuations.
The legislation also brings anti-money laundering and know-your-customer compliance into sharper focus.
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