Analyzing the Features of the GENIUS Act - Recently Approved U.S. Cryptocurrency Legislation
The U.S. Senate took a significant step forward in digital currency regulation on June 18, 2025, by passing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This bill establishes a federal regulatory framework for stablecoins, a type of cryptocurrency pegged to stable assets like the U.S. dollar to maintain a consistent value.
The passage of the GENIUS Act opens the door for traditional financial firms and tech companies to issue stablecoins, fostering competition and innovation in the digital economy. Stablecoins like USDT and USDC, designed for low-cost, instant transactions, are ideal for payments, remittances, and trading, making them a valuable addition to the financial landscape.
Stablecoin issuers must obtain licenses to operate in the U.S. market and hold reserves of liquid, safe assets to back their tokens. The bill includes anti-money laundering (AML) and consumer protections for issuers, ensuring transparency, security, and consumer protection.
The bill's passage positions the U.S. to compete globally, especially as the EU's MiCA framework gains traction. The legislation extends ethics standards to special government employees and prohibits members of Congress or senior executive branch officials from issuing stablecoins during their tenure, maintaining integrity in the digital financial sector.
However, the bill's passage may strain resources, as stablecoin issuers, both bank and nonbank, will fall under the Office of the Comptroller of the Currency (OCC). Oversight by the Federal Reserve and OCC may result in high compliance costs, potentially stifling smaller innovators.
The House's STABLE Act differs from the GENIUS Act, and reconciling the two could delay final enactment. The bill helps maintain U.S. dollar dominance in the global digital economy and could be critical if stablecoin adoption surges, as some Democrats wanted stronger protections against fraud and market manipulation.
The senators involved in developing the GENIUS Act primarily have a background in U.S. financial regulation and policymaking. The legislation reflects efforts to create a comprehensive legal framework for stablecoins and digital currencies, balancing federal oversight, ensuring compliance with anti-money laundering and sanctions rules, and enabling tech companies and non-bank entities to issue stablecoins, marking a shift in power toward private corporations in the digital financial sector.
The bill now moves to the House for potential revisions. The passage of the GENIUS Act suggests more progress is possible in 2025, with the 2026 midterm elections looming, as the crypto industry's influence is backed by pro-crypto lawmakers like Sens. Hagerty and Lummis. The bill's passage also signals a rejection of a U.S. central bank digital currency (CBDC), unlike Europe's digital euro pilot, and a proposal by Sen. Cynthia Lummis for a bitcoin reserve to address national debt, though its funding model remains controversial.
In March 2025, the House passed H.J.Res.25 to repeal the Biden administration's FAFSA broker rule. The passage of the GENIUS Act, along with the repeal of the DeFi broker rule, indicates a shift towards a more crypto-friendly regulatory environment in the U.S. The GENIUS Act is a significant step towards ensuring the growth and stability of the digital economy, while maintaining consumer protection and financial integrity.
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