Senator Hagerty to Introduce GENIUS Act for Stablecoin Rules

Senator Bill Hagerty will introduce a bill on Tuesday to establish a framework for stablecoins, a type of cryptocurrency that stays stable by being backed by the US dollar or other assets.

The bill is called the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act. Senators Kirsten Gillibrand, Tim Scott, and Cynthia Lummis also support it.

Senator Hagerty to Introduce GENIUS Act, Source: X

As per Hagerty, it aims to provide a predictable regulatory framework that encourages innovation and supports President Donald Trump’s goal of making the U.S. a leader in crypto. 

The legislation outlines rules for issuing stablecoin payments. It requires stablecoin payments to be backed with cash, Treasury bills, or other safe assets. Companies issuing stablecoins must also submit monthly audited reports on their reserves, with penalties for false reporting.

The stablecoin market reached a value of $205 billion by the end of 2024. The market is mainly dominated by the cryptocurrency firm Tether Holdings Ltd., and Cantor Fitzgerald, owned by incoming Commerce Secretary Howard Lutnick, holds a stake in Tether.

The bill would require stablecoin issuers to submit monthly audited reports on their reserves. Providing false information would lead to criminal penalties.

Regulators have raised concerns about whether stablecoin issuers, like Tether’s USDT, have enough reserves to handle large withdrawals during market stress. Nonbank stablecoin issuers would be regulated by the Office of the Comptroller of the Currency (OCC), a bureau within the Treasury Department.

Trump has promised to support the crypto industry by reducing regulations and appointing crypto-friendly officials. Trump once doubted crypto, but he changed his stance in the 2024 election when crypto executives supported his campaign. Last month, Trump issued an executive order to promote the advancement of digital assets in the U.S.

He also stopped work on a central bank digital currency (CBDC), which some see as a rival to stablecoins. While his order created a group to suggest new crypto rules, Congress must approve any actual policy changes. Both Democrats and Republicans are interested in setting stablecoin regulations.

Trump’s approach is very different from former President Biden, who was skeptical of crypto and focused more on investigations and enforcement rather than creating clear rules.