After the GENIUS Act Failed in the Senate Last Week, Legislators Added a Few Bipartisan Amendments

These represent significant concessions to the anti-crypto faction, with several important restrictions. In particular, they ban Big Tech firms from issuing and possibly even holding stablecoins.

Lawmakers are working on bipartisan amendments to the GENIUS Act, which would impose significant restrictions on Big Tech firms in the realm of stablecoins, according to two Senate aides familiar with the matter.

These amendments represent substantial concessions to the anti-crypto faction, especially in light of the Act's failure in the Senate last week due to stiff Democratic opposition and Republican defections.

The aides disclosed that the amendments would increase stablecoin transparency and streamline the process for taking enforcement actions against noncompliant firms. They would also restrict the types of companies that could issue stablecoins, ensuring they meet specific criteria.

"Prohibits non-financial publicly traded companies from issuing a stablecoin unless they can meet strict criteria regarding financial risk, consumer data privacy, and fair business practices. This helps prevent companies like Meta, Amazon, Google, and Microsoft from issuing a stablecoin and maintains the separation between banking and commerce," reads one version of the amendment.

However, a different version of the amendment, also confirmed by a Senate aide, suggests that the intent is to prohibit non-financial companies, including major tech firms, from "holding" any type of stablecoin.

The bill's language is still being finalized, so it's unclear which version will be included in the final text.

Here's a preview of how the GENIUS Act might—final text pending—limit major tech companies from owning stablecoins. Tech companies would be prohibited from issuing stablecoins "unless they can meet strict criteria regarding financial risk"https://t.co/Lh2h4ZoxO8

— Ben Monroe (@benmonroe) August 4, 2023

The aides preferred not to be named as the bill is still in flux and the information is not public yet. Their statements also come as House Financial Services Chair Maxine Waters (D-CA) continues to express skepticism towards the bill.

Stablecoin regulations have been a priority issue for U.S. crypto regulation, and the GENIUS Act is the industry’s best hope for passing them.

The bill, which stands for Granting Enormous Notional Impact to U.S. Savings, would impose new regulations on stablecoins, aiming to mitigate the potential for fraud and deception. It also seeks to create a regulatory framework for crypto exchanges, an area that the SEC has been actively focusing on.

After its failure in the Senate last week, the bill is now being revised to address the concerns that led to its downfall. These include limiting the potential for fraud in a few ways, like making it clear that these products have no consumer protection under the FDIC or federal affiliation.

The amendments also specify that stablecoins cannot be named after the U.S. or any federal agency, and they introduce an amendment to restrict the types of companies that can hold or issue stablecoins.

"Non-financial companies that apply for a national bank charter or federal savings association membership to issue a stablecoin must meet strict criteria in order to be approved for an application to issue a stablecoin," the amendment states.

This amendment, in particular, has huge implications. It aims to prevent major tech companies like Meta, Amazon, Google, and Microsoft from issuing stablecoins and maintain the separation between banking and commerce.

These amendments also loosen the requirements for taking enforcement actions against stablecoin issuers and place these actions under the Treasury’s purview, as other regulators like the SEC and CFTC have been massively downsized with the new amendments.

One amendment specifically names Elon Musk as a federal employee with strong conflicts of interest on this matter, but it names others as well.

The amendments also state that the Treasury can't perform the duties assigned to it by the bill if it has any outstanding obligations to a private company for more than 90 days.

Finally, one amendment says that the new duties assigned to the Treasury by the bill would cease 60 days after the enactment of legislation to reauthorize the Export-Import Bank of the United States.

Of course, these amendments are still pending and might not be finalized. In any event, they represent a massive win for the crypto-skeptical faction in Congress.