The US Senate has taken a significant step towards regulating the stablecoin market. The GENIUS Act, approved by the Banking Committee, proposes that stablecoin issuers be subject to federal oversight. If the bill passes through both chambers of Congress, comprehensive regulations for the cryptocurrency market will be implemented.

The Senate Banking Committee approved the bill targeting federal-level regulation of stablecoin issuers by a vote of 18 to 6. Known as the GENIUS Act, the bill now moves to the Senate floor and a similar process is required in the House of Representatives. Once the different bills in both chambers are reconciled and pass a general vote, the stablecoin regulations will become law and be presented to President Donald Trump for approval.

Efforts to regulate the stablecoin market have long been debated in the US Congress, and the bill’s approval by the Banking Committee signifies a significant milestone in the sector’s regulatory efforts. With Republicans holding the majority in both chambers of Congress following the 2024 elections, advancing the stablecoin law has become a top priority agenda item.

CRITICISM FROM DEMOCRATS

While Democratic senators largely supported the stablecoin regulation bill, all the additional regulatory control amendments they proposed were rejected through partisan votes. Senior Democrat Elizabeth Warren of the Committee criticized certain provisions of the bill as posing a serious threat to national security. Expressing increasing disappointment at the rejection of her proposals, Warren pointed out reports of connections between a financial institution linked to Trump, World Liberty Financial, and the cryptocurrency exchange Binance during the discussions, stating that pushing the bill forward amid allegations of Trump trying to create his own stablecoin with a suspicious organization without addressing the identified gaps would be folly.

Senator Catherine Cortez Masto criticized Republicans for not participating in sessions addressing amendments to the bill and delaying discussions. Masto argued that while the bill marked an important beginning, it was not yet ready to be implemented, advocating for more regulatory oversight in the legislation.

Committee Chairman, Republican Senator Tim Scott, emphasized the complexity of the process, saying, “We worked nights, days, weekends to achieve this.”

WHAT THE GENIUS ACT ENTAILS

The GENIUS Act, crafted by Tennessee Senator Bill Hagerty, known as the “US Guide and Support for National Innovation and Stability for Stable Money Act,” calls for the federal-level regulation of stablecoin issuers. The bill includes provisions for consumer protection, the promotion of market competition, and the support of innovation.

Democrats Kirsten Gillibrand of New York and Angela Alsobrooks of Maryland, along with a group of Republican senators, co-sponsored the bill, demonstrating a bipartisan effort. Hagerty stated that the bill aims to provide the clarity and stability needed by the country and innovators.

While there are still hurdles to overcome for the enactment of stablecoin regulations in the US, a similar bill must be advanced in the House of Representatives, and it is expected that the different versions from both chambers will be combined to create a unified regulation. However, considering the increasing support for regulatory efforts in the cryptocurrency sector in Congress, the likelihood of the stablecoin law being enacted appears stronger than ever.