Senate to vote on updated GENIUS Act for stablecoin regulation

The U.S. Senate Banking Committee is set to vote on March 13 on the updated Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a bipartisan bill designed to establish a regulatory framework for stablecoins.

The bill, originally introduced by Senator Bill Hagerty (R-TN) in February, underwent revisions after consultations with both Republican and Democratic lawmakers.

The GENIUS Act aims to regulate stablecoin issuers based on their market capitalisation.

Issuers with market caps exceeding $10 billion, such as Tether (CRYPTO:USDT) and Circle’s USDC (CRYPTO:USDC), would fall under federal oversight, while smaller issuers could opt for state-level regulation if the state framework aligns with federal standards.

The bill also mandates strict 1-to-1 reserves for stablecoins, requiring them to be fully backed by U.S. dollars or other liquid assets like Treasury bills.

Senator Kirsten Gillibrand (D-NY), a co-sponsor of the bill, highlighted its focus on consumer protections and financial transparency.

“The updated version of the GENIUS Act makes significant improvements to provisions such as authorised issuers, risk mitigation, insolvency procedures, and transparency,” she stated.

The legislation also prohibits algorithmic stablecoins, addressing past collapses like Terra/Luna that caused substantial investor losses.

Critics and analysts note that the bill could give U.S.-issued stablecoins a competitive edge by imposing stricter requirements on foreign issuers.

Dom Kwok, co-founder of Web3 app EasyA, remarked that foreign issuers may struggle to meet the high standards outlined in the bill, potentially benefiting domestic players like USDC and Ripple USD (CRYPTO:RLUSD).

While the GENIUS Act has bipartisan support, it faces a long legislative path before becoming law.

After the Senate Banking Committee vote, it will need approval from the full Senate and House of Representatives before reaching President Donald Trump’s desk for final approval or veto.

The bill is part of broader U.S. efforts to maintain its economic leadership in digital assets amid competition from China’s digital yuan and Europe’s crypto regulations.

Proponents argue that clear stablecoin rules are essential for fostering innovation while ensuring financial stability and consumer protection.