According to reports, the US Senate has taken a big step towards regulating stablecoins, clearing a major hurdle for the bipartisan GENIUS Act, a bill to create a framework for stablecoin issuers and operations in the US. The bill passed a procedural vote Monday night with over 60 Senators voting in favor, after an earlier attempt failed due to cross-party concerns over consumer protections and national security.
What Changed Between the First and Second Votes?
Based on available data, the May 8 vote to advance the bill failed as lawmakers from both sides of the aisle had concerns about the initial draft. Senators Rand Paul and Josh Hawley joined several Democrats in voting against cloture, effectively blocking the bill. Critics pointed to lack of consumer protections, clear oversight and federal vs state regulation of stablecoin issuers.
After that, Senate negotiators reportedly made some modest but targeted changes. While some industry folks expected more, sources told CoinDesk the changes were “enough” to address Democratic concerns. Senator Mark Warner (D-VA) and Rep. Ruben Gallego (D-AZ), who opposed the bill initially, confirmed they flipped their votes after the revised language.
What’s in the GENIUS Act?
The GENIUS Act, short for Guarding Economy and National Interests Using Stablecoins, regulates the issuance and reserve practices of stablecoin operators. The bill gives oversight to federal agencies like the OCC and allows state regulators to retain some licensing powers.
It requires issuers to hold fiat reserves for every stablecoin in circulation. It introduces audit mandates, compliance reporting and limits on algorithmic stablecoins, those not fully backed by fiat assets. Lawmakers say it will protect consumers and allow innovation to continue under clearer rules.
Political Will Aligns as Market Matures
Senate Banking Committee Chairman Sherrod Brown (D-OH) who helped shape the bill said it’s not perfect but “a starting point to protect Americans who use digital dollars”. Senate Majority Leader Chuck Schumer confirmed the bill will go into final debates and votes before heading to the House which is already drafting its own version. This could be a sign of the growing power of the crypto industry.
According to Circle and Tether, the market cap of dollar-pegged stablecoins is now over $160 billion, hence, it’s time for specific rules. Industry execs including Coinbase CEO Brian Armstrong have publicly called for a federal framework for stablecoins and not regulatory fragmentation.
Market and Industry Response
The bill isn’t law yet, but the Senate vote is being seen as a big deal for crypto in the US. Sheila Warren, CEO of the Crypto Council for Innovation, tweeted that the GENIUS Act’s advancement is a turnaround in how Washington approaches stablecoin oversight.
The Blockchain Association put out a statement praising the bipartisan vote and urging the House to move fast to match the Senate bill.
However, not everyone is convinced. Critics say the bill gives too much discretion to federal agencies, especially when it comes to what constitutes a “qualified issuer”. Others worry that strict federal requirements will drive smaller or newer stablecoin projects offshore.
What’s Next for the Stablecoin Bill?
The Senate will finalize and schedule a full vote by the end of this session. If it passes; it will need to be reconciled with the House version before the President can sign it into law.
House Financial Services Committee Chair Patrick McHenry is optimistic; saying stablecoin legislation is one of the few areas where bipartisan agreement is still possible. If both chambers agree on core definitions and supervisory roles, the US will have its first digital dollar framework.
Conclusion: Regulatory Clarity Within Reach
The Senate’s advancement of the stablecoin legislation means we’re moving from gridlock to progress in Washington’s approach to crypto regulation. While passage isn’t guaranteed, the bipartisan momentum behind the GENIUS Act is the clearest sign yet that US lawmakers are starting to agree on a regulated digital dollar.
If passed, the bill could be the foundation for long term stability and compliance in the stablecoin space.
FAQs
What is the GENIUS Act?
The GENIUS Act; is a Senate bill to create a federal framework for stablecoin issuance and regulation in the US.
Why did the Senate’s first vote on the bill fail?
The May 8 vote failed due to bipartisan concerns about consumer protection and national security.
What changes were made to the bill before the second vote?
Revisions included more consumer protection language; and clarification of oversight roles between federal and state regulators.
Does the bill affect Algorithmic stablecoins?
Yes; the bill limits algorithmic stablecoins and requires fiat backed reserves for qualified issuers.
What’s next for stablecoins?
The Senate will vote and send it to the House; which is working on a companion bill.
Glossary
Stablecoin: cryptocurrency pegged to a stable asset like the US dollar to reduce price volatility.
Cloture Vote: Senate procedure to end debate and vote on a bill or nomination.
Fiat Reserves: Government issued currencies held by stablecoin issuers to back the digital tokens in circulation.
OCC (Office of the Comptroller of the Currency): federal agency that regulates and supervises national banks and federal savings associations.
Algorithmic Stablecoin: stablecoin maintained by algorithms rather than asset backing.
Sources
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