US Lawmakers Reintroduce GENIUS Act to Establish Stablecoin Regulatory Framework

U.S. lawmakers have reintroduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act to establish a clear regulatory framework for stablecoins.

The revised bill, spearheaded by a bipartisan coalition that includes Senators Bill Hagerty (R-TN), Tim Scott (R-SC), Kirsten Gillibrand (D-NY), Cynthia Lummis (R-WY), and Angela Alsobrooks (D-MD), aims to provide a structured path for stablecoin issuers while maintianing consumer protection, financial stability, and national economic interests.

GENIUS Act: The Changing Era For Stablecoins?

The GENIUS Act has been under development through extensive consultations with industry participants, academic experts, and government stakeholders.

According to the lawmakers backing it, the bill seeks to unlock stablecoins’ economic potential while maintaining oversight to mitigate systemic risks.

Senator Hagerty mentioned in the press release that stablecoins can enhance transaction efficiency, drive demand for U.S. Treasuries, and position the U.S. as a leader in financial innovation.

Meanwhile, Senate Banking Committee Chairman Tim Scott framed the legislation as necessary to ensure the stablecoin sector grows within the U.S. regulatory umbrella, preventing American firms from being outcompeted by foreign issuers.

“This bipartisan agreement […] will protect consumers and expand financial inclusion for Americans across the country.”

The revised bill, which the Senate Banking Committee will vote on on March 13, introduces stricter standards for stablecoin issuers, particularly foreign-based ones, by enforcing higher reserve, liquidity, and compliance requirements.

It could significantly transform the global stablecoin space if passed, reinforcing the U.S. dollar’s dominance in digital finance.

Strengthening U.S. Stablecoins While Increasing Foreign Issuer Scrutiny

A key aspect of the updated GENIUS Act is its tougher stance on non-U.S. stablecoin issuers.

Dom Kwok, founder of a prominent Web3 application, highlighted that the legislation’s new provisions introduce stricter reserve requirements, anti-money laundering (AML) compliance, counter-terrorism financing checks, and liquidity mandates.

ICYMI some important updates to the new stablecoin bill, the “Genius Act”.

TLDR these updates give stablecoins like $RLUSD and $USDC an upper hand over foreign-issued stablecoins.

how? by holding foreign issuers to extra high standards including:

– strict reserve… pic.twitter.com/D5vWiJK5YC

— Dom (Bull/ish) | EasyA (@dom_kwok) March 11, 2025

These high standards could create formidable barriers for foreign stablecoin issuers, giving U.S.-based companies like Circle (issuer of USDC) and Ripple (issuer of RLUSD) a competitive edge.

The bill maintains its core framework, which is that stablecoin issuers with over $10 billion in market capitalization will fall under Federal Reserve oversight. In contrast, smaller issuers will continue to be regulated at the state level.

Senator Lummis also mentioned that maintaining a dual oversight structure, where issuers can choose between state and national regulatory pathways, balances innovation and security.

The bill aims to facilitate stablecoin growth within a structured framework, preventing regulatory arbitrage while ensuring compliance with national financial stability objectives.

Potential Market Impact and Legislative Hurdles

The GENIUS Act is part of a broader legislative effort to establish a stablecoin framework in the U.S., aligning with competing proposals like the Clarity for Payment Stablecoins Act and the Lummis-Gillibrand Payment Stablecoin Act.

The latter two proposals also impose strict reserve requirements, mandate transparent redemption policies, and require stablecoin issuers to undergo third-party audits.

However, the GENIUS Act has gained momentum due to its bipartisan backing and alignment with the Trump administration’s pro-crypto stance.

Industry experts and financial analysts believe passing a stablecoin bill could transform U.S. digital asset markets.

A February 2025 report from OurNetwork revealed that stablecoins comprise over 1% of the U.S. dollar M2 money supply, highlighting their growing role in the financial system.

A recent S&P Global Ratings analysis also emphasized that stablecoin adoption among institutional investors would remain stagnant without clear regulation, limiting their mainstream financial integration.

🚨 S&P Global Ratings @SPGlobal: Stablecoin market us up $70B in six months, reinforcing the need for clear US regulations.#S&P $Stablecoins https://t.co/3JrInzL1ip

— Cryptonews.com (@cryptonews) February 20, 2025

The bill’s pathway through Congress remains uncertain. If approved by the Senate Banking Committee, it will move to a full Senate vote before advancing to the House of Representatives.

Should both chambers approve it, the bill will head to President Trump’s desk for final approval or veto.

As it stands now, the upcoming March 13 vote will be a key milestone in determining whether the bill will move forward or face additional revisions in its journey toward becoming law.