GENIUS Act Returns to Senate Floor

Senators are expected to debate the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act on Monday, May 19.

Senators are set to resume debate on Monday on the bipartisan legislation that would create a U.S. regulatory framework for payment stablecoins.

The legislation, known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, is being championed by Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand and Cynthia Lummis.

It suffered a setback earlier this month when it failed to secure enough votes to advance from the Senate.

The bill, which combines elements of both a Republican and Democratic bill from last year, had initially garnered bipartisan support from the Banking Committee and was broadly expected to pass the Senate.

However, most Democrats ultimately opposed the GENIUS Act when it came up for a vote on May 8.

The bill's supporters are now working to address their colleagues' objections and win over support for the legislation.

Senators Gillibrand and Lummis recently expressed their hope that the Genius Act would pass the Senate by Memorial Day, May 26.

The bipartisan legislation would create a federal framework for stablecoins, which are digital currencies pegged to a stable asset, such as the U.S. dollar.

Stablecoins have grown rapidly in recent years, raising concerns about potential risks to consumers and the financial system.

The GENIUS Act is intended to mitigate these risks while also fostering innovation in the digital asset ecosystem.

The bill would impose reserve and audit requirements on stablecoin issuers, provide oversight rules, and set forth consumer protections and anti-money laundering measures.

It would also grant state regulators the primary role in licensing stablecoin issuers.

The House Financial Services Committee approved a bill in March that would create a new regulatory framework for stablecoins.

The bill, named the Stablecoin TEFRA Act, is an attempt to streamline the divergent legislative proposals from both chambers and both parties.

The legislation would also place the primary role for licensing stablecoin issuers with state regulators.

The bill now heads to the full House for a vote.

The Senate Banking Committee approved a bipartisan bill in April that would create a U.S. regulatory framework for cryptocurrencies.

The legislation, S.1508, is an updated version of the Financial Innovation and Technology for the 21st Century Act, also known as the "FIT Act," which was passed by the Senate Banking Committee in 2022.

The House Financial Services Committee approved a bill in March that would create a new regulatory futures.

The legislation, H.R. 1537, is an attempt to streamline the divergent legislative proposals from both chambers and both parties.

The bill, which was approved in a 27-0 vote, is now likely headed to the full House for a vote.

The administration has largely opposed the piecemeal approach to crypto legislation and prefers a more holistic strategy that spans multiple sectors and technologies.

The administration’s preferred approach is to grant the Securities and Exchange Commission broad authority over crypto assets and to place primary oversight of stablecoins with the banking agencies.

The administration’s proposal would also create a new federal regulator to oversee crypto activity in the fringes of the financial system.

The administration’s proposal would also impose stringent anti-money laundering and sanctions compliance obligations on crypto firms and grant state regulators the primary role in licensing stablecoin issuers.

The administration’s proposal would also place limits on elected officials' ability to participate in crypto-related business ventures.

In a recent memo, the office of Democratic Senator Elizabeth Warren argued that without measures to prevent elected officials from engaging in stablecoin ventures, the GENIUS Act would “turbocharge President Trump’s ability to benefit from his crypto deals.”

“Congress is writing a law expected to massively increase the size of the stablecoin market and increase the value of stablecoin businesses,” the memo stated.

Denouncing Trump’s “outrageous stablecoin-related activities,” it said the bill in its current form would only “fuel his crypto profits.”