On May 19, 2025, the Senate voted to advance groundbreaking new legislation to create a comprehensive federal framework for the issuance and oversight of stablecoins in the U.S. Coined the GENIUS Act (short for Guiding and Establishing National Innovation for U.S. Stablecoins), the bill details how stablecoins can be issued, regulated, and ultimately integrated into the U.S. financial system. With the Act potentially primed to become law, many are asking—what is in it?
The Act defines a stablecoin as a digital asset issued for payment or settlement at a predetermined fixed value and allows only “permitted” issuers to issue stablecoins in the U.S. Issuers are also required to maintain a reserve to back the stablecoin that holds one dollar of value per one dollar of stablecoin issued. The Act also mandates certifications of third party audits with large issuers (over $50 billion) being required to submit annual audited financial statements. Although certain stablecoin issuers (over $10 billion) fall under federal oversight, smaller issuers could remain under state supervision, certified by a newly created Stablecoin Certification Review Committee. Further, issuers are exempt from the capital standards applied to banks but regulators are required to issue rules governing capital standards for issuers.
Under the Act, issuers are to be treated as a “financial institution” under the Bank Secrecy Act, making them subject to the relevant regulatory obligations, and additionally are required to adopt an anti-money laundering program. The Act provides that stablecoin holders are granted priority for repayment in the event of a bankruptcy. There are also criminal penalties (up to $1 million and/or 5 years imprisonment) for violations of the Act.
Takeaway
Although the Act has yet to be passed, the Senate’s vote to advance the bill is significant for several reasons. First, the cloture vote to proceed to the measure was bipartisan, with 16 Senate Democrats voting in favor of the motion. Second, the bill creates a framework for issuers that would streamline compliance obligations, particularly if the issuer is licensed by the Federal Reserve or the Comptroller of the Currency—allowing issuers to avoid duplicative, state-level requirements. Third, the GENIUS Act if passed would clarify that stablecoins could serve as not only a legitimate means of payment, but collateral as well in the context of trading markets.
