TL;DR

• The U.S. Senate passed the GENIUS Act on June 17—a bipartisan bill creating the first federal stablecoin framework.
• It limits issuers, enforces 1:1 reserves in U.S. Treasury-grade assets, mandates audits, and bans interest payments.
• The act extends rules to foreign issuers and gives both state and federal regulators authority.
• Tensions remain: some see it as overdue clarity; others fear loopholes benefiting Trump and threats to market stability.

On June 17 , the U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act by a convincing 68–30 vote. If signed into law by the House and President Trump, it would introduce the first comprehensive federal regulatory framework for stablecoins, cryptocurrencies pegged to the U.S. dollar aiming to balance innovation, protection, and financial stability.

What Counts as a “Payment Stablecoin”?

Under the GENIUS Act, a payment stablecoin must:

1. Be intended for payments or settlements.
2. Be redeemable at a fixed value in fiat (not another crypto).
3. Maintain a consistent peg to a government-issued currency.

By these definitions, instruments like bank deposits, traditional securities, and central bank digital currencies (CBDCs) are excluded from the bill’s scope.

Who Can Issue Stablecoins Under the GENIUS Act?

Only the following entities may issue payment stablecoins in the U.S.:

1. Subsidiaries of federally insured banks, approved by regulators.
2. Federal non-bank issuers, like fintech firms and national banks regulated by OCC.
3. State-qualified issuers, approved by state authorities (with certain federal rule alignment).

Notably, individuals and most foreign companies cannot issue payment stablecoins to U.S. users, unless they have reciprocal compliance with U.S. regulation. In three years, even foreign stablecoin issuers will be blocked unless recognized by U.S. regulators, a move designed to limit cross-border risks.

Reserve Requirements and Reporting Obligations

GENIUS mandates strict discipline:

• 1:1 asset backing: stablecoins must be fully backed by ultra-safe assets—namely:
• U.S. dollar cash
• Short-duration Treasuries (≤ 93 days)
• Eligible money-market instruments
• Monthly reports and audits: CEOs/CFOs must sign off on reserves, with third-party attestations and public disclosures on coin supply and reserve composition.

Bans on:

• Interest payments on stablecoins, no yield allowed.
• Rehypothecation of reserves, no reuse for other purposes.

If issuers fail to comply, they face removal from U.S. exchange platforms even if based overseas.

A Watershed Moment for Better and Worse

The passage marks a major milestone in setting stablecoin guardrails.  But The reaction had two major angles:

Industry Optimism – Traditional tankers like Tether, whose opaque reserve practices drew concern now face pressure to comply. Circle, a more transparent issuer, saw its stock rise . Meanwhile, demand for safe assets surged: stablecoin reserves now account for about $200 billion in short-term Treasuries  .

Criticism from Progressives – Senator Elizabeth Warren warned that without stricter corruption guarding, the act could benefit President Trump’s stablecoin ties pointing explicitly to conflicts of interest involving Trump and his family . Indeed, opponents see the act granting loopholes that could support political insiders.

Rival Bills, Leverage, and Looming Questions

While GENIUS gained momentum, it currently heads to the House where proponents could push other crypto-focused bills like the STABLE Act or a broader market-structure package. Some crypto leaders argue that linking GENIUS with larger reforms like SEC oversight and custody clarity, could risk delaying the bill’s progress  .

President Trump has publicly urged the House to quickly pass the bill ,

Without Democrats' amendments, which may dampen Democratic influence over its final shape.

Why This Matters

1. Regulatory clarity finally. Enterprises now know who can issue and under what terms.
2. Consumer safety, better defined. Full backing, public audits, and no-yield rules are aimed at reducing systemic risk and ensuring liquidity.
3. Dollar dominance, protected. By rooting stablecoin reserves in Treasuries, the bill strengthens demand for U.S. debt while maintaining the dollar’s global role .
4. Politicization risk remains. Critics warn that without stronger ethics limits, GENIUS may empower insiders more than consumers.

Final Thought

The GENIUS Act has opened a new chapter in crypto regulation, one where stablecoins finally meet federal oversight. Whether this becomes a lasting standard depends on House negotiations and whether Congress can close political loopholes.

But the stakes are high: properly executed, this act secures the foundations for trustworthy digital dollars and payment innovation. Mishandled, it risks undermining the very promise of transparent, borderless finance.

It’s a moment of potential, a test of whether lawmakers can chart a clear, ethical path through the future of money.