The U.S. Senate has progressed in establishing a regulatory framework for stablecoins by advancing the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). This legislation overcame a filibuster with a 66-32 vote. The Act seeks to provide a federal framework for stablecoin regulation, according to Chainalysis.
The bipartisan GENIUS Act, co-sponsored by Senators Kirsten Gillibrand (D-NY) and Bill Hagerty (R-TN), aims to offer regulatory clarity to the stablecoin industry. The bill sets standards for reserves, audits, and disclosures, as well as compliance with law enforcement requirements. It mandates full reserve backing of stablecoins with U.S. dollars or liquid assets and requires monthly public disclosures of reserve composition.
The GENIUS Act is designed as a consumer protection and national security measure. It mandates compliance with the Bank Secrecy Act, including anti-money laundering (AML) and sanctions programs, transaction monitoring, and enhanced due diligence. The Act also introduces technical enforcement capabilities, requiring issuers to freeze or burn tokens.
The advancement of the GENIUS Act occurs amid a global push for stablecoin regulation, including the EU's MiCA. The Act is expected to enhance the U.S.'s competitive edge in blockchain innovation and set a global standard for stablecoin regulation. Should it pass both chambers of Congress, it could become law later this year.
This development could pave the way for broader adoption of stablecoins across global financial systems. It will facilitate cross-border payments and digital settlements while reinforcing U.S. leadership in digital asset innovation.
This article is based on our author's analysis of materials taken from Chainalysis.