GENIUS Act Gains Momentum in Congress
In a major step toward overhauling the U.S. digital payments landscape, the Senate has advanced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a bipartisan bill spearheaded by Senator Bill Hagerty of Tennessee. The legislation aims to establish a comprehensive regulatory framework for payment stablecoins, digital assets pegged to the U.S. dollar, which are increasingly used for fast and secure transactions.
Key Provisions and Industry Impact
- Federal and State Oversight: The GENIUS Act introduces a tiered system, allowing stablecoin issuers to operate under state supervision until their issuance exceeds $10 billion, after which federal oversight becomes mandatory.
- Consumer Protections: The bill mandates strict reserve requirements, regular independent audits, and public disclosures to ensure stablecoins are fully backed and transparent.
- AML and Compliance: Issuers must comply with anti-money laundering and sanctions regulations, reinforcing national security and financial integrity.
- No Interest Payments: Stablecoins are prohibited from offering interest, distinguishing them from traditional bank deposits and reducing risks to the banking system.
- Exclusion from Securities Laws: The legislation clarifies that payment stablecoins are not to be classified as securities, providing legal certainty for issuers and users.
Lawmakers’ Perspectives
Senator Hagerty emphasized that the GENIUS Act will unleash innovation and solidify the U.S. dollar’s status as the world’s reserve currency, arguing that “failing to act now would mean falling behind in global competitiveness.” Senate Banking Committee Chairman Tim Scott of South Carolina echoed these sentiments, highlighting the bill’s potential to expand financial inclusion and maintain U.S. leadership in digital finance.
Next Steps
The GENIUS Act recently passed a significant Senate vote with broad bipartisan support and is now headed for further consideration in the full Senate. Parallel efforts in the House of Representatives are underway, with similar legislation being drafted to ensure a unified approach to stablecoin regulation.
Conclusion
If enacted, the GENIUS Act is expected to modernize America’s payment infrastructure, foster innovation, and provide robust consumer protections, positioning the United States at the forefront of the global digital economy.
