The US Senate has decided to move forward with the “Guiding and Establishing National Innovation for US Stablecoins” (GENIUS) Act after lawmakers invoked cloture, clearing the way for further debate on the landmark legislation to regulate the $250 billion stablecoin market that provides clear guidelines for token issuance and reserve obligations.
GENIUS Act, introduced by Senator Bill Hagerty in February, was voted 68 to 30 on June 11, less than a month after failing its first cloture vote, as it then gathered no support from Democrats. The bill is now up for a full Senate floor vote before being sent to the House of Representatives (Congress) for further consideration.
GENIUS Act Heads For Full Senate Floor Vote, Lawmakers Urge Congress to Support the Stablecoin Legislation
Sen. Tim Scott, a co-sponsor of the GENIUS Act and chairman of the Senate Banking Committee, lauded bipartisan support for the bill from both Republicans and Democrats, calling it a significant win for innovation and national security that will “bring cryptocurrency into the mainstream”. Senate Majority Leader John Thune has urged members of Congress to support the bill, stating that it would help make the US the “crypto capital of the world”, echoing President Donald Trump’s talking points.
According to its text, the GENIUS Act requires stablecoins to be fully backed by US dollars or similarly liquid assets, mandates annual security audits for tokens with a market capitalization of more than $50 billion, directs licensed entities to gain prior approval from federal or state regulators, and includes language regarding foreign issuance.
While the bill restricts the issuance and circulation of algorithmic stablecoins – a type of cryptocurrency that uses algorithms and smart contracts to maintain a stable value, rather than physical collateral – It will allow American banks and other financial institutions to issue their own stablecoins, provided they are registered and meet the regulatory requirements.
GENIUS Act also takes into account the worst-case scenario of an issuer facing insolvency, in the event of which, the stablecoin’s holders will be prioritized over its creditors. Additionally, issuers will also be required to abide by conventional Anti Money Laundering (AML) regulations.
Sen. Thune noted there was “more work to be done” for Congress concerning digital assets. He was specifically referring to the ‘Digital Asset Market Clarity Act’, or CLARITY, a crypto market structure bill seeking to establish clear legal guidelines for regulatory bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) while overseeing the digital asset sector.
On Tuesday, June 10, the bill cleared two key House committees – the House Agriculture Committee and the House Committee on Financial Services, potentially advancing it to a full congressional floor vote. But the CLARITY Act was met with a slew of amendments from Democrats who want it to address Trump’s crypto conflicts of interest.
Democrats Claim Conflicts of Interest Over Trump’s Crypto Businesses, Demand Amendments to the GENIUS Act
Some Democrat lawmakers voted no to advance the GENIUS Act, including Senate Minority Leader Chuck Schumer, Sen. Amy Klobuchar, and Sen. Elizabeth Warren, among others. Speaking from the Senate floor, Warren said there were “core problems” with the bill that the chamber failed to address by not voting on certain proposed amendments.
Democrats had cited concerns over the bill’s provision related to foreign stablecoin issuers, AML standards, corporate issuance, and most importantly, President Trump’s ties to crypto ventures backed by his sons, Donald Trump Jr. and Eric Trump.
Shortly before his inauguration, Trump launched the Official Trump Token ($TRUMP) memecoin and several Trump-themed NFTs to commemorate his presidency. World Liberty Financial, a DeFi firm affiliated with the President’s family, recently launched the USD1 stablecoin, and The Trump Media Group announced plans to use $2.32 billion in net proceeds to build a Bitcoin treasury. TRUMP coin’s largest holders were also rewarded with a dinner at the President’s Mar-a-Lago residence in Florida and access to the man himself.
Sen. Warren said that the GENIUS Act is “riddled” with loopholes and contains weak safeguards for consumers, national security, and financial stability. She accused the bill of favoring the President’s crypto businesses, which the Massachusetts lawmaker alleges were set up for trading favors like tariff exemptions, pardons, and government appointments, in exchange for billions of dollars in bribes from billionaires, foreign governments, and large corporations.
Although the GENIUS Act received bipartisan support to invoke cloture, some Democrats continue to request that Republicans consider their amendment for the bill. It is also unclear whether the stablecoin legislation will gain enough support to pass the Senate chamber, where Republicans currently hold a slim majority.
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Trump Wants Stablecoin Bill to Become Law by August, But Senate and House Divided Over Certain Regulations
Some lawmakers even floated the idea of combining the stablecoin bill with the larger crypto market structure bill. Trump’s AI and Crypto Czar, David Sacks, noted on Monday that the White House expects the GENIUS Act to pass in the Senate with bipartisan support. The President has told his advisors that he wants to have the stablecoin legislation at his desk to be signed into law by August.
Invoking cloture on GENIUS has set it up for a final passage on Monday unless the Senate Republican and Democrat leadership reach a time agreement to shorten debates and move up the final vote.
Even if the GENIUS Act gets through the Senate, it is less likely to pass in the House of Representatives, where a companion bill to regulate stablecoins, called the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, has advanced out of the House Financial Services Committee and is awaiting a full floor vote.
The Senate and House are divided on how stablecoin issuers are regulated at the state and federal levels, and the treatment of foreign issuers like Tether. Both will have to come to a consensus on their respective bills before being sent to the Oval Office.