A bipartisan group of senators introduced an update to a bill that seeks to establish a clear regulatory framework for payment stablecoins. The bill is the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (S.919).
By way of background, dollar-denominated payment stablecoins are digital assets pegged to the U.S. dollar. They can be used to improve transaction efficiency, expand financial inclusion, and strengthen the dollar’s supremacy as the world reserve currency by driving demand for U.S. Treasuries.
This updated bill provides clear regulatory guidelines for stablecoins by defining a payment stablecoin as a digital asset used for payment or settlement that is pegged to a fixed monetary value. It also establishes clear procedures for institutions seeking licenses to issue stablecoins. In addition, it implements reserve requirements and tailored regulatory standards for stablecoin issuers.
Further, for issuers of more than $10 billion of stablecoins, it applies the Federal Reserve’s regulatory framework to depository institutions and the Office of the Comptroller of the Currency’s framework for nonbank issuers. Additionally, it allows for state regulation of issuers under $10 billion in market capitalization and provides a waiver process for issuers exceeding the threshold to remain state regulated. Finally, it establishes supervisory, examination, and enforcement regimes with clear limitations.
The legislation has benefited from extensive consultation with industry participants, academic experts, and government stakeholders.
“From enhancing transaction efficiency to driving demand for U.S. Treasuries, the potential benefits of strong stablecoin innovation are immense,” Sen. Bill Hagerty (R-TN), one of the bill’s sponsors, said. “My legislation establishes a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto. I look forward to working with Chairman French Hill and the House Financial Services Committee to get it to the President’s desk and signed into law.”
It was also sponsored by Sens. Tim Scott (R-SC), Kirsten Gillibrand (D-NY), Cynthia Lummis (R-WY), and Angela Alsobrooks (D-MD).
“The updated version of the GENIUS ACT makes significant improvements to a number of important provisions, including consumer protections, authorized stablecoin issuers, risk mitigation, state pathways, insolvency, transparency, and more,” Gillibrand said. “This bill represents a true bipartisan effort, and I want to thank all our partners for their willingness to seek and find common ground. Passing clear and sensible stablecoin legislation is essential to our country’s future, and I’m confident this bill will foster innovation, protect consumers, and maintain the dominance of the U.S. dollar.”