Bipartisan Support: U.S. Senate Passes GENIUS Act to Regulate Stablecoins

The U.S. Senate has taken a significant step towards regulating the cryptocurrency market by passing a bill to create a regulatory framework for stablecoins, a type of digital asset designed to maintain a constant value, usually a 1:1 dollar peg. The bill, known as the GENIUS Act, received bipartisan support with several Democrats joining most Republicans to back the proposed federal rules. The bill passed 68-30 and now needs to be passed by the House of Representatives before it can be sent to President Donald Trump for approval.

Stablecoins are commonly used by crypto traders to move funds between tokens, and their use has grown rapidly in recent years. Proponents say that they could be used to send payments instantly, and if signed into law, the stablecoin bill would require tokens to be backed by liquid assets such as U.S. dollars and short-term Treasury bills. Issuers would also be required to publicly disclose the composition of their reserves on a monthly basis.

The crypto industry has long pushed for lawmakers to pass legislation creating rules for digital assets, arguing that a clear framework could enable stablecoins to become more widely used. The sector spent more than $119 million backing pro-crypto congressional candidates in last year's elections and had tried to paint the issue as bipartisan. However, tensions on Capitol Hill over Trump's various crypto ventures threatened to derail the digital asset sector's hope of legislation this year as Democrats have grown increasingly frustrated with Trump and his family members promoting their personal crypto projects.

Despite these concerns, the bill could still face further changes in the House of Representatives. The Conference of State Bank Supervisors called for “critical changes” to mitigate financial stability risks, expressing concern with the dramatic and unsupported expansion of the authority of uninsured banks to conduct money transmission or custody activities nationwide without the approval or oversight of host state supervisors.

While the bill has received support from both parties, some Democrats have expressed concern that it would not prevent big tech companies from issuing their own private stablecoins and argued that legislation needed stronger anti-money laundering protections and prohibitions on foreign stablecoin issuers. Senator Elizabeth Warren, a Democrat, said in remarks on the Senate floor in May that "a bill that turbocharges the stablecoin market, while facilitating the president’s corruption and undermining national security, financial stability, and consumer protection is worse than no bill at all."

Overall, the passage of the GENIUS Act represents a significant step towards regulating the cryptocurrency market and creating a more stable and secure environment for investors and traders. However, further changes may be needed in the House of Representatives to address concerns from both parties and ensure that the final legislation is effective in protecting consumers and maintaining financial stability.