The U.S. Senate passed the GENIUS Stablecoin Act: Digital currency regulation enters a new era

On June 18, 2025, the U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) with an overwhelming majority of 68 votes in favor and 30 against, marking a historic step in cryptocurrency regulation. This bill establishes a comprehensive federal regulatory framework for U.S. dollar-pegged stablecoins, providing legal clarity for the digital asset market and potentially reshaping the global financial landscape.

I. Core Contents of the GENIUS Act

The GENIUS Act aims to establish clear regulatory standards for stablecoins - cryptocurrencies pegged to fiat currencies like the U.S. dollar. According to the bill, stablecoin issuers must meet the following key requirements:

1. Reserve Requirements: Issuers must hold reserve assets pegged 1:1 to stablecoins, primarily U.S. short-term Treasury bonds or other highly liquid assets, to ensure stablecoin stability and convertibility.
2. Regulatory Tiering: Issuers with assets under $10 billion will be supervised by state-level regulators, while large issuers will be overseen by federal regulatory bodies like the Treasury Department and Federal Reserve.
4. Consumer Protection: The bill requires stablecoin holders to have priority payment rights in case of issuer bankruptcy to protect investor interests.
5. Ethical Constraints: It prohibits congressional members and senior administrative officials from issuing stablecoins during their term and requires disclosure of stablecoin holdings over $5,000 to reduce potential conflicts of interest.
6. Foreign Issuer Regulation: Foreign stablecoins (like Tether) must be approved by the U.S. Treasury, with their home countries having "comparable" regulatory standards, and are prohibited from operating in sanctioned countries or areas deemed "major money laundering risks".

Additionally, the bill specifies that qualifying payment stablecoins are not considered securities, thus exempting them from securities laws and providing space for industry innovation.

II. Background and Political Negotiations

The passage of the GENIUS Act was not straightforward and involved intense political negotiations and multiple revisions. Initially approved by the Senate Banking Committee in March 2025 with an 18-6 bipartisan vote, the first cloture vote in early May failed 49-48 due to Democratic concerns about consumer protection, national security, and potential conflicts of interest related to the Trump family's involvement in cryptocurrency.

The Trump family's USD1 stablecoin from World Liberty Financial (WLF) became a focal point of controversy. After MGX's $2 billion investment using USD1, Senator Elizabeth Warren criticized the bill for failing to effectively limit the president's potential stablecoin profits, calling it "worse than no bill at all". However, after weeks of bipartisan negotiations, the bill passed the second procedural vote 66-32, with 16 Democrats switching support, including Mark Warner and Cory Booker.

The final Senate vote on June 18 passed 68-30, demonstrating bipartisan consensus on promoting financial innovation and maintaining U.S. global financial competitiveness. Republican Senator Bill Hagerty stated the bill would "lead a new payment era", significantly reducing transaction costs and improving efficiency. However, Senators Rand Paul and Josh Hawley remained opposed due to concerns about over-regulation and tech giants' potential profits.

III. Impact on Cryptocurrency Industry and Global Finance

1. Bringing Regulatory Clarity: The U.S. crypto market has long been criticized as a "wild west" due to lack of unified regulation. The GENIUS Act provides a clear legal framework for stablecoin issuers, potentially attracting traditional financial institutions. Coinbase's Public Policy VP Kara Calvert noted the bill would enable "faster, more convenient payments" for consumers and the industry. Analysts predict the stablecoin market could grow from $238 billion to $2 trillion in three years.
3. Response to Global Regulatory Competition: With the EU's Markets in Crypto-Assets (MiCA) effective since June 2024 and frameworks established in Singapore, Hong Kong, and Japan, the U.S. had previously lagged. Chainalysis CEO Jonathan Levin called the bill a "milestone for responsible innovation", helping the U.S. catch up in the global digital asset market.
4. Potential Risks and Criticisms: Despite broad support, critics warn of potential risks. Senator Warren believes the bill fails to address Trump family conflicts of interest and might facilitate "presidential corruption". Allowing non-financial tech companies like X platform to issue stablecoins raises concerns about data privacy and market concentration. Some worry that regulatory complexity might increase compliance costs and suppress small innovative enterprises.

IV. Prospects and Challenges

While the GENIUS Act passed the Senate, it must still clear the House of Representatives, which is reviewing another stablecoin bill, the STABLE Act. Differences in regulatory approaches, such as federal preemption scope and consumer protection details, remain. It's uncertain whether the House will directly adopt the Senate version or negotiate a merged bill. Over 120 amendment proposals, covering topics from credit card fee caps to presidential trade permissions, could potentially delay the legislative process.

Once signed into law, the GENIUS Act will inject new vitality into the stablecoin market, attracting traditional financial giants and driving innovation in cross-border payments and digital settlements. However, its implementation will depend on regulatory enforcement and balancing innovation with risk prevention.

V. Conclusion

The GENIUS Stablecoin Act's passage is a milestone in U.S. cryptocurrency regulation, providing much-needed legal clarity for the stablecoin industry and positioning the U.S. to compete in global financial technology. Despite ongoing debates, the bill reflects U.S. ambitions in the digital economy era. As the House review unfolds and regulatory details are established, the stablecoin market may experience explosive growth, propelling the U.S. financial system into a more digital and globalized new era.