GENIUS Act: A New Era for Stablecoin Regulation in the U.S.

Senator Bill Hagerty is set to introduce the Guiding and Establishing National Innovation in U.S. Stablecoins (GENIUS) Act, a bill aimed at regulating stablecoins—digital assets pegged to the U.S. dollar. The legislation seeks to establish a structured oversight framework by defining issuance procedures and assigning regulatory authority among federal and state agencies.

The GENIUS Act adopts a tiered approach to regulation. The Federal Reserve would oversee bank-issued stablecoins, while nonbank issuers exceeding $10 billion in assets would fall under the Office of the Comptroller of the Currency (OCC). State regulators would monitor smaller issuers, with an option for large firms to seek waivers to remain under state oversight.

A key provision of the bill mandates stablecoin issuers to maintain reserves backed by U.S. currency, Treasury bills, or other approved assets, ensuring the reliability of these digital tokens. Issuers must submit monthly audited reports detailing their holdings, with severe penalties, including criminal charges, for false disclosures.

The legislation has the backing of Tim Scott, chairman of the Senate Banking Committee, and Cynthia Lummis, head of its digital assets subcommittee. Their support marks a shift from prior sessions when similar efforts stalled due to resistance from former committee leadership. The GENIUS Act signals growing bipartisan recognition of the need for clear cryptocurrency regulations.

This legislative push aligns with the pro-crypto stance of the current administration. President Donald Trump has emphasized the importance of making the U.S. a leader in cryptocurrency innovation. The bill complements executive actions promoting dollar-backed stablecoins while opposing a central bank digital currency.

Stablecoins, designed to maintain value stability by being pegged to assets like the U.S. dollar, have seen rapid growth. Major players include Tether (USDT) and Circle’s USD Coin (USDC). The GENIUS Act aims to provide regulatory clarity, fostering further adoption and innovation within the U.S. financial sector.

As the bill moves forward, its reception among lawmakers and industry leaders will be crucial. The proposed framework seeks to balance oversight and innovation, reflecting the evolving digital financial landscape.

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