GENIUS Act passes Senate: What this means for stablecoins

The US crypto industry has reached a watershed moment as the US Senate passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, a landmark bill creating the first comprehensive federal framework for payment stablecoins in the United States. The legislation, which has navigated months of intense debate and bipartisan negotiations, marks a pivotal step toward regulatory clarity and the integration of digital assets into the mainstream financial system.

This article explores the explosive growth of the stablecoin market that prompted this legislation, breaks down the key provisions of the GENIUS Act and examines its potential impact on the future of crypto in the US and beyond.

Key Takeaways:

• The US Senate passed the GENIUS Act with a 68–30 bipartisan vote, establishing a federal regulatory framework for stablecoins upon a potential successful House vote.

• The bill mandates 1:1 reserve backing for stablecoin issuers, establishes a dual state-federal licensing system and clarifies the issuers’ legal status.

• While the act aims to boost investor confidence and dollar dominance, it now heads to the House for further debate amidst some ongoing concerns.

The explosive growth of the stablecoin market

Stablecoins are digital assets pegged to the value of a stable reserve asset, most commonly a fiat currency like the US dollar. They combine the speed and transparency of blockchain technology with the price stability of traditional currencies, making them a cornerstone of the crypto economy. Their growth has been nothing short of explosive.

As of Jun 20, 2025, the stablecoin market cap had reached $261 billion. According to on-chain data, the market saw over $4.1 trillion in transaction volume and 1.2 billion transactions in the past 30 days alone. Year-to-date, the market cap of USD-pegged stablecoins has grown by over 24%, with one-year growth surpassing 62%. This surge is led by giants like Tether's USDT and Circle's USDC, alongside crypto-backed alternatives like Sky's USDS (formerly known as DAI, issued by Maker) and Ethena's USDe.

This rapid expansion is no longer confined to the crypto space. Institutional adoption is accelerating, highlighted by Circle's recent $1.05 billion Nasdaq IPO. Major retailers like Walmart and Amazon, along with e-commerce powerhouse JD.com, are also exploring launching their own stablecoins to streamline payments, signaling a clear trend toward mainstream financial integration.

What is the GENIUS Act?

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is a historic piece of legislation designed to create clear rules for stablecoin issuers in the US. The bill passed the Senate on Jun 17, 2025, with a strong bipartisan vote of 68–30, a significant milestone for the digital asset industry.

The bill was championed by a bipartisan group of senators, including key sponsors Bill Hagerty, Tim Scott, Cynthia Lummis, Kirsten Gillibrand and Angela Alsobrooks. Its passage in the Senate follows a complex legislative journey, including an earlier failed procedural vote in May due to concerns raised by some Democratic senators. The bill's eventual success demonstrates a growing consensus in Washington that the US needs a clear regulatory framework to take the lead in the cryptocurrency market. The GENIUS Act will now move to the Republican-led House of Representatives for further consideration and debate.

Key provisions of the GENIUS Act

The GENIUS Act establishes a detailed regulatory framework that requires stablecoin issuers to adhere to strict standards, bringing them in line with traditional financial institutions. The bill mandates that all payment stablecoins be backed 1:1 by high-quality liquid assets, such as cash or short-term US Treasury securities. Issuers must provide monthly, audited public reports on their reserves to ensure transparency and solvency. 

The legislation also establishes a dual oversight system, allowing issuers to register with either state or federal authorities, with larger issuers (over $10 billion market cap) subject to federal oversight.

Crucially, the act clarifies that payment stablecoins are not to be treated as securities, providing much-needed legal certainty. It also classifies issuers as financial institutions under the Bank Secrecy Act, mandating robust anti-money laundering (AML) and consumer protection measures. In the event of an issuer's insolvency, stablecoin holders are given priority over other creditors, protecting consumers' funds.

Why the GENIUS Act matters

This legislation is significant for several reasons. First, it provides profound regulatory clarity for the $261 billion stablecoin market, which is projected to potentially reach $3.7 trillion by 2030. This clarity is expected to boost institutional adoption and investor confidence by creating a predictable and secure environment.

Second, the act positions the US to lead global stablecoin regulation, potentially setting a benchmark for international standards, much like the EU's MiCAR framework. Because the bill promotes US dollar–pegged stablecoins, Secretary of the Treasury Scott Bessent noted that it could increase demand for US Treasuries, which in turn would help lower government borrowing costs and reinforce the US dollar's global dominance.

Potential concerns concerning the GENIUS Act

Despite its bipartisan support, the bill is not without its critics. Senator Elizabeth Warren and other Democrats have voiced concerns that the legislation doesn’t sufficiently address potential conflicts of interest, particularly those linked to President Trump's family-backed crypto venture, World Liberty Financial, and its USD1 stablecoin. Opponents argue that the bill could be used to legitimize ventures that might blur the lines between political influence and financial gain.

The road ahead for stablecoin regulation

The passage of the GENIUS Act in the Senate is a monumental step, but the journey to becoming law isn’t over. Now, the bill heads to the House of Representatives, where it must be reconciled with the House's own stablecoin proposal, the STABLE Act. While the two bills share similar goals, they differ in certain structural and scoping details that will need to be negotiated.

Ultimately, the successful passage of a unified stablecoin bill would represent a new chapter of maturity for the crypto industry in the US, paving the way for safer innovation and broader adoption.

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