US Senate Will Vote on GENIUS Stablecoin Bill on Tuesday, While Trump Family's Crypto Connection Raises Conflict of Interest Concerns.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) is preparing to enter a full Senate vote on Tuesday after weeks of discussion and modification. The bill aims to establish the first federal legal framework for payment stablecoins, but is facing controversy over former President Donald Trump's deepening connection to the crypto industry.
Last week, the Senate passed a closure vote with a 68-30 ratio, allowing continued debate and paving the way for an official vote. Notably, 18 Democratic senators supported it, showing a clear shift from the previous failed vote due to lack of bipartisan consensus.
Ron Hammond, Policy Director at Wintermute, noted that "overall, it seems GENIUS will be passed by the Senate on Tuesday. Democratic senators have now somewhat supported at least stablecoin bills."
The GENIUS bill establishes strict standards for the stablecoin market, requiring stablecoins to be fully backed by USD or equivalent liquid assets. Issuers with a market capitalization over $50 billion will be subject to mandatory annual audits.
Concerns from World Liberty Financial and the Trump Family
A major point of controversy is the bill's limitation on non-financial public companies like Meta or Amazon issuing stablecoins, unless they meet strict financial risk and data privacy standards. However, the connection between the Trump family and World Liberty Financial – where three of Trump's children are listed as co-founders – is creating conflict of interest concerns.
World Liberty Financial recently issued a stablecoin that is quickly becoming the fifth-largest global stablecoin. Senator Elizabeth Warren, who strongly opposes crypto, has called for voting against GENIUS, arguing that "the company's stablecoin is being exploited by foreign investors for corrupt purposes."
To mitigate conflicts of interest, the bill has added a ban on members of Congress and executive officials directly participating in stablecoin issuance, while also requiring annual disclosure if government officials own more than $5,000 in payment stablecoins.
According to a Democratic Senate assistant, the bill cannot directly regulate the business activities of the President's family members due to "constitutional limitations." They stated, "We are well aware of the constitutional limits, so we only aim to ban officials while in office. The family is the most difficult part."
The emoluments clause in the US Constitution – which prohibits federal officials from receiving benefits from foreign governments without Congressional approval – could become the next point of debate if World Liberty Financial has connections to foreign capital.
The bill also adds an important bankruptcy provision, granting special legal priority to stablecoin holders when the issuing organization becomes insolvent, protecting them ahead of other creditors, especially compared to commercial bank depositors.
In the House, the Stablecoin Transparency and Accountability for a Better Ledger Economy bill is awaiting a full vote after being approved by the Financial Services Committee in May. Jennifer Schulp, Director of Financial Regulation Research at the Cato Institute, believes that "the House is likely to pass GENIUS directly, as the bill has achieved bipartisan consensus in the Senate."
She warns that if attempts are made to combine the two bills or further negotiate, "the process will be prolonged and unlikely to be completed before August," potentially delaying the establishment of this important legal framework for the hundreds of billions of dollars stablecoin market.
