Senate advances stablecoin bill with bipartisan support

The Senate Banking Committee has taken a significant step towards regulating stablecoins by advancing the GENIUS Act, a bill aimed at establishing a comprehensive regulatory framework for these digital assets.

The legislation, sponsored by Senator Bill Hagerty (R-TN), received bipartisan support with an 18-6 vote, marking a crucial milestone in the oversight of stablecoins.

The GENIUS Act proposes a dual regulatory pathway, allowing stablecoin issuers to choose between federal oversight under the Office of the Comptroller of the Currency (OCC) or state-level supervision, provided that state regulations meet federal standards.

This approach aims to address the unique challenges posed by stablecoins, including their potential impact on monetary policy and financial markets.

Senator Tim Scott (R-S.C.), Chairman of the Senate Banking Committee, emphasised the importance of regulatory clarity, stating that the bill takes action to “end the weaponisation of financial regulators” and ensure stablecoins are safe and reliable tools in the financial system.

The legislation also clarifies that payment stablecoins are not securities, which could have significant implications for their legal treatment.

Despite the bipartisan support, some committee members, including Senator Elizabeth Warren (D-Mass.), expressed concerns that the bill could provide loopholes for bad actors to evade sanctions and anti-money laundering laws.

However, the crypto industry welcomed the move as a positive step towards fostering innovation and ensuring the future of stablecoins in the U.S.

The bill now moves to the Senate floor for further consideration, while the House has yet to act on similar legislation.

The advancement of the GENIUS Act reflects growing momentum for stablecoin regulation and highlights the increasing recognition of stablecoins' role in the financial ecosystem.

As Blockchain Association CEO Kristin Smith noted, the bipartisan support underscores a commitment to encouraging crypto innovation in the U.S., emphasising that "crypto is nonpartisan".

This development aligns with President Trump's efforts to support crypto, including recent executive orders related to digital assets.

The GENIUS Act requires stablecoin issuers to maintain 1:1 reserves, ensuring that each token is backed by traditional assets like U.S. dollars or short-term Treasury bills.

This provision aims to enhance stability and trust in stablecoins, which are increasingly used in both digital and conventional financial markets.