The U.S. Senate has taken a significant step towards regulating the stablecoin market. The GENIUS Act, approved in the Banking Committee, anticipates stablecoin issuers being subject to federal oversight. If the bill passes both chambers of Congress, comprehensive regulations for the cryptocurrency market will come into effect. The Banking Committee of the U.S. Senate approved the bill aiming to regulate stablecoin issuers at the federal level with a vote of 18 to 6. Referred to as the GENIUS Act, this bill needs to go to the Senate floor and undergo a similar process in the House of Representatives. Once the different bills from both chambers are reconciled and pass a general vote, the stablecoin regulations will become law and be presented to President Donald Trump for approval. Efforts to regulate the stablecoin market have long been a topic of discussion in the U.S. Congress, and the bill’s approval by the Banking Committee signals a significant milestone in regulating the cryptocurrency sector. With Republicans expected to gain control of both chambers of Congress in the 2024 elections, the speedy advancement of the stablecoin bill has become a top priority.

CRITICISM FROM DEMOCRATS
While Democratic senators largely supported the stablecoin regulation bill, all the amendments they proposed to introduce additional regulatory controls were rejected through partisan votes. Senior Democratic member of the Committee Elizabeth Warren criticized the bill, stating that certain provisions posed a serious threat to national security. Expressing increasing disappointment as each of her proposed amendments was turned down, Warren pointed out the reports linking a finance institution associated with Trump, World Liberty Financial, with talks with the cryptocurrency exchange Binance, saying, “Advancing this bill without addressing the identified gaps and precisely at a time when there are allegations that Donald Trump is trying to create his stablecoin with a dubious organization would be insanity.” Democratic Senator Catherine Cortez Masto criticized Republicans for not participating in sessions addressing changes to the bill and delaying discussions, arguing that while the bill is a significant start, it is not ready to come into effect and needs more regulatory oversight.

COMMITTEE CHAIRMAN’S REMARKS
Committee Chairman, Republican Senator Tim Scott, highlighted the complexity of the process, saying, “We worked nights, days, weekends to achieve this goal.”

WHAT DOES THE GENIUS ACT ENTAIL?
The GENIUS Act, crafted by Senator Bill Hagerty from Tennessee and known as the “U.S. Guidance and Engaging National Innovation for Stablecoins Act,” outlines federal oversight of stablecoin issuers. The bill includes provisions for consumer protection, encouraging market competition, and supporting innovation. Democrats Kirsten Gillibrand from New York and Angela Alsobrooks from Maryland, along with a group of Republican senators, jointly sponsored the bill, demonstrating a bipartisan effort. Hagerty stated that the bill aims to provide the clarity and stability the country and innovators need. While there are still hurdles to overcome for stablecoin regulations to be enacted in the U.S., a similar bill must also progress in the House of Representatives, with both chambers expected to reconcile their versions to create a unified regulation. However, given the increasing support for regulatory efforts in the cryptocurrency sector in Congress, the likelihood of the stablecoin bill becoming law appears stronger than ever.