On June 17, afternoon Eastern Time, the U.S. Senate passed the landmark crypto assets legislation, the “GENIUS Act” (Guiding and Establishing National Innovation for U.S. Stablecoins Act), with a vote of 68 in favor and 30 against. The next step will be to submit it to the House of Representatives for review. If it passes smoothly without amendments, it will soon be presented to President Trump for signing into effect. In fact, the House of Representatives does not require an absolute majority vote for approval.

After the “GENIUS Act” has passed the Senate threshold, the path ahead is clear. This is a historic lobbying victory for digital asset companies in the Senate’s first vote on comprehensive regulatory reform for Crypto Assets. To quote Tennessee Senator Bill Hagerty, who is also a key figure behind the “GENIUS Act”, “America has taken another step towards becoming the Crypto capital.”

Overview of the core provisions of the GENIUS Act

The core provisions of the bill are as follows——

Mandatory 1:1 full assets: the scope includes cash, demand deposits in banks, and short-term U.S. government bonds. At the same time, misappropriation and re-pledging are strictly prohibited, and it is exclusively used for payment and settlement scenarios.

High-frequency transparency disclosure: It is necessary to regularly disclose the composition of reserves and redemption policies, which should be audited for compliance by a registered accounting firm.

Dual Licensing System: Once the circulating market value of the issuer’s stablecoin exceeds 10 billion USD, it must transition to the federal regulatory system within the stipulated timeframe, adopting banking-level supervision. Below this threshold, state-level regulation can be adopted, and small issuers may choose state-level registration (must comply with federal equivalency standards).

Anti-Money Laundering Compliance: Including stablecoin issuers and their custodians under the jurisdiction of the Bank Secrecy Act to fulfill financial institution-level AML obligations.

Clearly defined as a payment medium: The bill clearly defines stablecoins as a new type of payment medium, primarily subject to the banking regulatory framework, rather than constrained by securities or commodities regulatory frameworks.

The current stablecoins are welcomed: a maximum 18-month grace period after the bill takes effect, aimed at urging the issuers of existing stablecoins (such as USDT, USDC, etc.) to obtain licenses or comply as soon as possible.

So, the “GENIUS Act” will address the following historical issues.

Detailed Portal of the “GENIUS Act”: https://foresightnews.pro/article/detail/85338

The ideological struggle between the two parties in the United States

Tennessee Senator and one of the initiators of the GENIUS Act, Bill Hagerty, immediately expressed his “thank you speech”. He stated that the GENIUS Act establishes the first growth-friendly regulatory framework for payment stablecoins. The Act will consolidate the dollar’s dominance, protect customers, increase demand for U.S. Treasury bonds, and ensure that innovation in the digital asset space remains in the hands of the United States, not in the hands of adversaries.

By combining the advantages of the US dollar with the speed and efficiency of blockchain technology, the GENIUS Act promotes the adoption of Crypto Assets in the trade sector and pioneers a new generation of payment processing methods. Once the GENIUS Act becomes law, companies, small businesses, and individuals will be able to complete payments almost instantly, rather than waiting days or weeks and incurring corresponding fees. In short, stablecoins represent a paradigm shift that can bring our payment systems into the twenty-first century.

The legislation specifies the procedures for issuing stablecoins, designates clear roles for federal and state regulators, implements consumer protection standards, and includes strong safeguards to prevent illegal activities. Predictions indicate that with the passage of the GENIUS Act, by 2030, stablecoin issuers will become the largest holders of U.S. Treasury securities globally. Such an outcome will enhance fiscal resilience and solidify the dollar’s status as the world’s reserve currency.

U.S. Treasury Secretary Scott Bessent published a statement in support of the “GENIUS Act” at a crucial time, stating that the stablecoin market is expected to grow to $3.7 trillion by the end of this decade. Bessent indicated that a stablecoin ecosystem backed by U.S. Treasury bonds will drive demand for U.S. Treasury securities from the private sector, which is expected to lower government borrowing costs and help control national debt. He believes this is an innovative piece of legislation that benefits all three parties, allowing the private sector, the Treasury, and consumers to gain, while also helping more users globally enter the U.S. dollar-based digital asset economy.

However, the day before, the prominent Democratic “crypto hawk,” senior Democratic Senator Elizabeth Warren of the U.S. Senate Banking Committee, maintained a tough stance. She pointed out that the GENIUS Act has a significant loophole that allows large tech companies and major retailers to issue their own private coins and structure them as stablecoins. If Congress does not amend the GENIUS Act, billionaires like Elon Musk and Jeff Bezos will launch stablecoins to track your shopping behavior, exploit your data, and crush their competition.

In fact, in the case of the GENIUS Act, the Democratic senators represented by Elizabeth Warren have always been the main force obstructing the progress of the GENIUS Act. It was precisely under the collective opposition of the Democratic senators that the GENIUS Act failed to advance further during the Senate vote on May 8, obtaining only 49 votes (not reaching the minimum requirement of 60 votes).

The reason some Democrats ultimately switched sides is that the demands put forth by Elizabeth Warren were met. According to previous reports by NBC, representatives from both parties reached an agreement through negotiations. In exchange, the bill included some amendments, such as changes to consumer protection measures and restrictions on technology companies issuing stablecoins, as well as extending ethical standards to special government employees. Currently, the issuance of stablecoins by large tech companies is heavily restricted. Firstly, a regulated subsidiary dedicated to stablecoin operations must be established. Secondly, they must undergo the same prudent regulation as financial institutions. Thirdly, they must strictly adhere to data privacy standards, which to some extent mitigates the risk of large tech companies launching “shadow currencies” through ecological monopolies.

Where is Tether headed?

Currently, the world’s largest stablecoin issuer Tether (USDT) may become the first and largest “victim” of the GENIUS Act.

Currently, USDT is only about 85% backed by cash and cash equivalents, failing to meet the mandatory requirement of 1:1 cash and equivalents. Moreover, its auditing firm BDO Italia does not meet the standards of the Public Company Accounting Oversight Board (PCAOB) in the United States, making it even more difficult to be accepted by the U.S. system.

At the same time, Tether’s headquarters has moved to El Salvador, seeking political asylum from the pro-Crypto Assets president of El Salvador. Tether CEO Paolo Ardoino has hinted that the original USDT may no longer directly enter the U.S. market, but will launch a settlement stablecoin branch that complies with the GENIUS Act framework. However, in markets outside the U.S., the originally dominant USDT business is unlikely to easily give up.

Therefore, the influence of the “GENIUS Act” is currently more focused on the U.S. mainland, playing more of a benchmark role in the Crypto Assets regulatory field. The traditional stablecoin market will not disappear immediately. However, with the evolution of compliance, compliant stablecoins will inevitably rise to mainstream status in the future. The 600% increase in Circle’s market value 10 days post-listing may just be the beginning of the stablecoin blue ocean.

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