Senator Bill Hagerty Introduces the GENIUS Act to Regulate Stablecoins

Highlights:

• The Act will require issuers to keep reserves in US currency or approved assets.
• Large stablecoin issuers will follow Federal Reserve rules, while state authorities will regulate smaller ones.
• The Trump administration believes that stablecoins will boost the US dollar’s dominance.

Senator Bill Hagerty introduced the GENIUS Act to Congress in order to establish stablecoin regulatory standards in the United States. The legislation requires stablecoin issuers to obtain licenses and set minimum reserve requirements. In addition, they have to maintain financial transparency through public disclosures.

The tide has turned in favor of digital assets here in America. I’m pleased to lead my colleagues in the GENIUS Act, which will help make our nation a positive environment for stablecoins and digital assets. pic.twitter.com/osNj1t7Qtj

— Senator Bill Hagerty (@SenatorHagerty) February 4, 2025

A definition in the bill specifies stablecoins as digital assets that maintain their value by being tied to the US dollar. The bill requires companies that issue stablecoins to maintain reserves, which must consist of US currency and Treasury bills or approved alternative assets. Issuers must submit audited monthly reports to verify their compliance with reserve requirements. Criminal penalties will apply to issuers who submit false reports according to the bill.

Oversight and Impact on Stablecoin Issuers

The GENIUS Act has divided stablecoin issuers into categories based on their collateral assets. The Federal Reserve will regulate stablecoin issuers with assets above $10 billion, while state regulators will regulate smaller stablecoin issuers.

Under the proposed bill, the Federal Government would regulate nonbank stablecoin issuers through the Office of the Comptroller of the Currency (OCC). The proposed legislation aims to create a regulatory structure that does not overwhelm innovation by imposing unnecessary restrictions. The structured framework proposed by lawmakers aims to establish stability and security throughout the growing stablecoin market.

Regulators are closely monitoring stablecoins because the public is worried about the verification of their reserves. The stability of reserves has become an area of controversy for stablecoin issuer Tether alongside other platforms. The recent profit results from 2024 have intensified doubts about transparency in financial operations. The new law will address these problems as it will require issuers to report obligations. This means that the companies have to publish their reserve summaries monthly. These requirements would improve oversight while safeguarding investor funds.

Political and Market Reactions

Several lawmakers from both parties endorse the GENIUS Act. The bill has received sponsorship from lawmakers including Senators Tim Scott, Kirsten Gillibrand, and Cynthia Lummis. Political representatives across different parties agree the growing stablecoin market requires clear regulation. The regulatory structure stands as a key factor that supporters believe will enhance the financial system of the United States.

I’ve said it once, and I’ll say it again: this is the year for digital assets. I joined @SenatorHagerty to introduce the GENIUS Act, fulfilling @POTUS's promise to make America the capital of crypto. pic.twitter.com/1OEsfxlLIh

— Senator Cynthia Lummis (@SenLummis) February 4, 2025

The bill aligns with the Trump administration’s recent efforts to promote cryptocurrency growth in the United States. President Donald Trump has expressed support for the adoption of stablecoin while opposing the development of central bank digital currency (CBDC).

The US President officially signed an executive order last month to enhance stablecoin growth. The current administration maintains divergent policy actions compared to previous government policies that emphasized enforcement above clear regulatory guidance.

Advocates of the bill state that stablecoins provide a solution to sustain US dollar supremacy in international financial markets. White House AI and crypto adviser David Sacks supports the legislation. According to him, stablecoins will boost international demand for the US dollar which will make it stronger as the global reserve currency.

JUST IN: 🇺🇸 President Trump's Crypto Czar David Sacks says stablecoins have the potential to ensure the US dollar dominance internationally. pic.twitter.com/yU5BTa25k6

— Watcher.Guru (@WatcherGuru) February 4, 2025