Senate advances GENIUS Act, legislation aimed at regulating stablecoin market
The United States Senate is currently deliberating on the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), a landmark legislation that aims to regulate the stablecoin market and establish a federal regulatory structure for these digital assets.
Initially, the bill faced opposition from Senate Democrats due to concerns about consumer protection, foreign issuer oversight, and potential links to former President Donald Trump's crypto-related ventures. However, recent developments have seen several Democrats changing their position, allowing the bill to advance to the next stage.
The GENIUS Act focuses on regulating Permitted Payment Stablecoin Issuers (PPSIs), which must be subsidiaries of insured depository institutions or federally/state-qualified nonbanks. These issuers are subject to stringent reserve, redemption, compliance, and disclosure requirements to ensure trust, transparency, and financial stability in stablecoin operations.
Key regulations proposed by the GENIUS Act for stablecoin issuers include:
- Strict 1:1 reserve backing: All payment stablecoins must be backed one-to-one by U.S. dollars or U.S. Treasury securities, repurchase agreements, or other low-risk approved assets. Issuers must publish monthly detailed reserve breakdowns and undergo regular audits by registered public accounting firms to ensure transparency and liquidity.
- Licensing and eligibility: Only permitted issuers—subsidiaries of insured banks, credit unions, or approved nonbank financial institutions—can issue stablecoins. Non-financial public companies must obtain unanimous approval from the Stablecoin Certification Review Committee chaired by the Treasury Secretary before issuance. Individuals convicted of certain financial crimes are barred from serving as officers or directors of stablecoin issuers.
- Redemption and operational requirements: Issuers must maintain clear redemption policies allowing holders to redeem stablecoins at par value, demonstrate operational soundness, and retain the technical capacity to freeze or burn coins if legally required.
- Consumer protection and marketing restrictions: Issuers are prohibited from marketing stablecoins as legal tender, federally insured, or backed by the U.S. government. They must also adhere to data privacy rules, barring the use of transaction data for targeted advertising or sharing data with non-affiliates without consumer consent.
- Compliance with AML and CFT laws: All stablecoin issuers are subject to the Bank Secrecy Act, mandating strong anti-money laundering and counter-terrorism financing safeguards.
- Supervision and oversight: The Act authorizes the Office of the Comptroller of the Currency (OCC) and state regulators to supervise issuers falling under their jurisdictions, while the Treasury Department develops a framework certifying comparable state regimes.
- Implementation timeline: The regulatory framework takes effect on the earlier of January 18, 2027, or 120 days after final implementing regulations are issued, giving stakeholders an 18-month compliance window from enactment on July 18, 2025.
The GENIUS Act, if passed into law, would not involve any promotions or advertisements for Mirax Casino or any other entity. This legislation aims to create a federally supervised, transparent, and secure environment for payment stablecoins, promoting innovation while mitigating systemic risks, enhancing consumer protection, and upholding financial stability in the U.S. digital asset sector.
A final vote on the GENIUS Act may take place later in the week. The Senate is currently open to further debate and potential amendments before making a decision on the bill.
The GENIUS Act, if passed into law, will regulate Permitted Payment Stablecoin Issuers (PPSIs), requiring them to maintain a strict 1:1 reserve backing and undergo regular audits for transparency and liquidity.
Key Democratic senators have recently changed their positions, allowing the GENIUS Act to advance, which includes regulations such as licensing and eligibility requirements, redemption and operational standards, consumer protection measures, and compliance with AML and CFT laws.
