Senate Passes GENIUS Act, Marking the First Comprehensive Regulatory Framework for Stablecoins

The U.S. Senate is moving closer to setting the first federal framework for stablecoins, with the GENIUS Act advancing in the chamber.

Senate Majority Leader John Thune (R-SD) on Wednesday began procedures to expedite a vote on the bill. It’s the first legislation to comprehensively create a U.S. regulatory regime for stablecoins.

The bill, sponsored by Senator Bill Hagerty and co-sponsored by Senators Tim Scott (R-SC) and Cynthia Lummis (R-WY), would regulate stablecoins that are pegged to the U.S. dollar.

The legislation is designed to counter the House’s STABLE Bill, which was approved by the House Financial Services Committee last year. Both bills set different regulatory approaches for stablecoins.

The Senate Banking Committee passed the GENIUS Act earlier this month with strong bipartisan support. The committee voted 18-6 to advance the bill, with five Senate Democrats joining Republicans to push it forward.

Senator Tim Scott, chair of the National Republican Senatorial Committee, said the bill is a “critical first step” to fulfill President Donald Trump’s mandate to advance a regulatory framework for digital assets. This statement aligns with the administration’s broader crypto policy goals.

Senator Hagerty expressed confidence about the bill’s progress, adding that he expects a full floor vote by the end of April.

The Trump administration reportedly wants both the Senate’s GENIUS Act and the House’s STABLE Bill signed before Congress’s August recess.

Key Differences Between Senate and House Bills

The Senate’s GENIUS Act differs from the House’s STABLE Bill in three key areas.

The Senate version allows money market funds to be used as reserves, while the House bill takes a more restrictive approach.

Both bills provide a $10 billion threshold, but with different regulatory approaches.

They also have contrasting positions on algorithmic stablecoins. The STABLE Bill imposes a two-year moratorium, while the GENIUS Act only requires a brief study.

These differences highlight the various approaches lawmakers are considering as they work to create the first federal framework for stablecoin regulation.

The bills represent different visions for how stablecoins should fit into the existing financial system.

Opposition and Concerns

Despite its progress, the bill faces opposition from traditional banking advocates.

Arthur Wilmarth, Professor Emeritus of Law at The George Washington University, called the Senate stablecoin bill “deeply flawed” and warned it poses “grave and unacceptable dangers” to consumers and the broader financial system.

Wilmarth argues that nonbank stablecoin issuers could compete with FDIC-insured banks by offering what he terms “shadow deposits.” This competition could potentially undermine the traditional banking system, according to his analysis.

The professor has also raised concerns that the bill could allow Big Tech companies and other commercial enterprises to acquire non-bank stablecoin issuers. This would potentially give these firms a pathway to enter the banking industry.

Crypto industry players also appear divided on the legislation. Last week, reports emerged that Coinbase (NASDAQ:COIN), the largest crypto firm in the U.S., is allegedly trying to prevent both the GENIUS Act and the STABLE Act from reaching floor votes.

Tech venture capital firm Andreessen Horowitz has reportedly been “sympathetic” to delaying votes on stablecoin legislation and has been assisting Coinbase in these efforts.

This suggests disagreement within the crypto industry itself about the proposed regulatory frameworks.

Beyond its immediate impact on stablecoins, the GENIUS Act aims to cement U.S. dollar dominance in global finance. This broader objective reflects concerns about maintaining American financial leadership in an increasingly digital global economy.

The bill represents the first major attempt by U.S. lawmakers to create clear rules for the rapidly growing stablecoin sector, which has become a crucial part of the cryptocurrency ecosystem in recent years.