US Senate Set for Final Vote on GENIUS Stablecoin Act: What It Means for Crypto Regulation

The U.S. Senate is scheduled to hold its final vote on the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act, S.1582) on June 17 at 4:30 PM EDT (8:30 PM UTC), marking a critical step toward regulating stablecoins in the United States. According to journalist Eleanor Terrett, the bill has completed its amendment process and, if passed, will advance to the House of Representatives for further consideration. This vote represents the last hurdle for the GENIUS Act in the Senate, following months of negotiations and procedural votes.

Core Provisions of the GENIUS Act

The GENIUS Act aims to establish a federal framework for stablecoins, cryptocurrencies designed to maintain a stable value by pegging to assets like the U.S. dollar. Key provisions include:

• Issuer Eligibility:

  • Domestic Issuers: Only federally licensed non-bank institutions, regulated bank subsidiaries, or state-approved issuers whose standards align with federal requirements, as certified by the U.S. Treasury, may issue stablecoins.

  • Foreign Issuers: Must originate from jurisdictions with equivalent stablecoin regulatory frameworks, register with the Office of the Comptroller of the Currency (OCC), comply with U.S. legal orders (e.g., token freezing or destruction), and maintain sufficient reserves in U.S. financial institutions to ensure liquidity for U.S. Users.

• Reserve and Transparency Requirements:

  • Issuers must maintain a 1:1 reserve of safe, highly liquid assets, such as cash, U.S. Treasury securities, or central bank deposits, segregated from operational funds.

  • Stablecoins are strictly payment instruments, prohibited from offering interest or investment returns.

  • Monthly public disclosures of reserve composition are mandatory, with annual financial audits required for issuers whose stablecoin market cap exceeds $50 billion.

• AML and Compliance:

  • Issuers must adhere to the Bank Secrecy Act, implementing robust Know Your Customer (KYC) and AML programs, monitoring large or suspicious transactions, retaining records, and enabling the freezing of accounts or blocking prohibited transactions.

• Consumer Protections:

  • Monthly reserve disclosures ensure transparency for users.

  • Misleading claims, such as implying government backing or FDIC insurance, are prohibited, clarifying that stablecoins are not insured bank deposits and carry risks like depegging or issuer insolvency.

  • In bankruptcy, user funds are prioritized over creditor claims.

Potential Market Implications

The GENIUS Act could significantly reshape the U.S. stablecoin landscape:

• Compliant Stablecoins: USDC, issued by Circle, and PYUSD, backed by PayPal, are well-positioned to meet the bill’s requirements due to their existing regulatory alignments. First Digital’s FDUSD, registered in Hong Kong, shows strong compliance but may face challenges in cooperating with U.S. authorities on account freezes or token destruction, impacting its U.S. market prospects.

• Non-Compliant Stablecoins: Tether’s USDT, operating without a U.S. financial license, could face heightened regulatory scrutiny, potentially limiting its dominance despite widespread global use.

• DeFi Challenges: Decentralized stablecoins like DAI, algorithmic stablecoins like FRAX, and yield-bearing stablecoins like USDe are unlikely to secure compliance under the GENIUS Act, threatening their viability in the U.S. market.

Bipartisan Support and Lingering Concerns

The GENIUS Act has garnered bipartisan backing, evidenced by a 68-30 cloture vote on June 11 to advance the bill, with a coalition of Republicans and crypto-friendly Democrats supporting its progress. Senate Banking Committee Chairman Tim Scott and Senator Cynthia Lummis have been vocal proponents, emphasizing the bill’s potential to legitimize stablecoins and foster economic growth. Treasury Secretary Scott Bessent recently projected that the legislation could drive the U.S. stablecoin market to exceed $2 trillion by 2028.

However, opposition persists. Senator Elizabeth Warren, a long-standing crypto skeptic, has criticized the bill’s integration of stablecoins into the financial system without sufficiently robust safeguards, warning of risks akin to those that triggered past financial crises. Warren also raised concerns about potential conflicts of interest, particularly regarding President Donald Trump’s ties to World Liberty Financial, a venture that recently launched its own stablecoin. Republican Senator Rand Paul has also expressed reservations, questioning the need for federal regulation of stablecoins altogether.

What’s Next?

If the Senate passes the GENIUS Act with a simple majority, it will move to the House, where a parallel bill, the Stablecoin Transparency and Accountability for a Better Ledger Economy Act (STABLE Act), is under consideration. The two chambers must reconcile differences, particularly on state versus federal oversight and foreign issuer regulations, before sending a final version to the President’s desk.

The crypto industry views the GENIUS Act as a foundational step toward broader digital asset legislation, with additional bills on market structure gaining traction in Congress. The outcome of Tuesday’s vote could shape the regulatory landscape for years to come, influencing everything from consumer trust to institutional adoption.