Senate votes down the GENIUS Act by a margin of 1, leaving the future regulations of stablecoins uncertain.
The U.S. has established a significant milestone in digital asset regulation with the enactment of the GENIUS Act on July 18, 2025. Contrary to initial reports, the Act did not fail in the Senate but was passed with bipartisan support, setting a regulatory foundation for stablecoins classified as "payment stablecoins."
Under the GENIUS Act, issuers of payment stablecoins are limited to insured depository institutions such as banks or credit unions or certain regulated entities. A 1:1 reserve requirement is imposed, meaning stablecoin issuers must back all issued stablecoins with fully reserved assets like physical currency, U.S. Treasury bills, or other regulator-approved low-risk assets, subject to regular auditing and reserve composition reporting.
The Act excludes SEC and CFTC regulatory authority over payment stablecoins, clarifying federal and state oversight roles and offering new bankruptcy protections for holders. Issuers must also comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) rules under the Bank Secrecy Act to enhance consumer protection.
Despite this milestone, the U.S. regulatory landscape remains somewhat fragmented as other bills, such as the Stablecoin Transparency and Accountability Act (STABLE Act), are still pending full Congressional approval. These bills aim to complement the GENIUS Act by further clarifying regulatory boundaries and possibly expanding the framework to include additional types of stablecoins, such as yield-bearing stablecoins, which are currently excluded under the GENIUS framework.
Looking ahead, potential integration or harmonization between the GENIUS Act and other legislative efforts like the STABLE Act could create a more unified federal stablecoin regime. Ongoing debates about extending regulatory coverage to yield-bearing stablecoins to encourage innovation while managing risks are also expected. Continued focus on consumer protections, systemic risk mitigation, and fostering innovation will be crucial to maintain U.S. competitiveness in the global digital asset ecosystem.
Notably, the failure of the GENIUS Act to advance in the Senate initially sparked frustration among prominent voices in the cryptocurrency sector. Senator Hagerty, who introduced the bill, expressed his frustration following the vote, stating that the failure puts the U.S. at risk of losing a dominant position in the cryptocurrency industry. Senator Lummis also voiced her criticism, criticizing Congress for its failure to advance meaningful regulation for digital assets.
However, Treasury Secretary Scott Bessent weighed in on the matter, emphasizing the importance of the GENIUS Act in expanding dollar dominance and U.S. influence in financial innovation. Bessent wrote that without the GENIUS Act, stablecoins will be subject to a patchwork of state regulations instead of a streamlined federal framework.
With the GENIUS Act now in place, policymakers and industry stakeholders are now turning their focus to the upcoming legislative session for potential developments regarding stablecoin regulation. The GENIUS Act, a bipartisan push to bring clearer regulatory guidelines to the U.S. digital asset landscape, was supported by Senators Tim Scott, Kirsten Gillibrand, Cynthia Lummis, and Angela Alsobrooks.
- The passing of the GENIUS Act has established a regulatory foundation for stablecoins in the United States, paving the way for investment and technological advancements in the digital asset sector.
- Under the GENIUS Act, stablecoin issuers are restricted to banks, credit unions, and certain regulated entities, ensuring their compliance with regulations such as anti-money laundering rules.
- Though the GENIUS Act provides a significant step in digital asset regulation, ongoing debates and pending bills like the STABLE Act aim to further clarify regulatory boundaries and potentially expand the framework to include yield-bearing stablecoins.
- The passing of the GENIUS Act has garnered support from policymakers like Senators Tim Scott, Kirsten Gillibrand, Cynthia Lummis, and Angela Alsobrooks, who see it as a crucial step towards maintaining U.S. competitiveness in the global digital asset ecosystem.
