 "A person uses a mobile phone with the US Capitol building in the background. Reuters")
In a momentous decision that marks a significant turning point for the cryptocurrency industry, the United States Senate has passed the groundbreaking Genius Act, creating the first major federal framework to regulate stablecoins, a specific category of cryptocurrency tethered to the US dollar.
This landmark legislation passed with strong bipartisan support, securing a 68–30 vote, and is poised to reshape the American digital finance scenario while intensifying political and ethical debates surrounding the burgeoning crypto sector.
What the Genius Act delivers
At the heart of the Genius Act lies a commitment to bring regulatory clarity to stablecoins, which have long operated in a legal grey zone. Republican Senator Bill Hagerty of Tennessee, who introduced the bill, described the legislation as a modernisation of the US payment infrastructure, calling stablecoins a “paradigm-shifting development” that would allow payments to be settled almost instantaneously.
As Hagerty emphasised on the Senate floor, the bill promises to bring the US payment system into the 21st century and solidify the dollar’s dominance in the digital realm.
Under the new law, stablecoins must be fully backed by US dollar reserves, subject to monthly audits and meet strict anti-money laundering (AML) standards. These provisions aim to protect consumers and establish trust in a sector often associated with volatility and fraud.
The legislation also mandates that the US Treasury develop clear rules for monitoring suspicious activity and enhances bankruptcy protections for bank depositors, as reported by CBS News.
Importantly, the bill empowers a wide range of entities—including banks, fintech firms and even major retailers—to issue their own stablecoins, a move expected to dramatically expand the stablecoin market. According to The New York Times, projections suggest that the US stablecoin market could surpass $2 trillion in the coming years if the legislation becomes law.
Impact Shorts
More ShortsPolitical winds shift in Washington
The bill’s passage signals a remarkable shift in Washington’s attitude toward digital assets. For years, the crypto sector was met with scepticism on Capitol Hill. However, the Genius Act’s advancement illustrates how the industry’s lobbying power and financial influence have grown significantly.
According to The New York Times, crypto-linked super PACs invested over $130 million during the 2024 election cycle, supporting 53 out of 58 winning candidates across party lines. This campaign helped reshape the narrative around cryptocurrency, transforming it from a speculative gamble into a credible component of the financial system.
Senator Kirsten Gillibrand, a Democrat from New York who worked extensively on the bill, argued that failing to regulate stablecoins had left American consumers vulnerable and hindered the nation’s competitiveness.
As CBS News highlighted, Gillibrand defended the Genius Act as a necessary step, acknowledging President Donald Trump’s crypto-related business ties were “extremely unhelpful” but asserting that they should not diminish the bill’s overall merit.
Republicans, emboldened by a political trifecta and a White House increasingly friendly to digital assets, have championed the bill as a measure to restore the nation’s competitive edge. A White House policy statement cited by The New York Times claimed that the Genius Act would remove regulatory uncertainty and strengthen the global position of the US dollar within the crypto economy.
Trump ties and Democratic resistance
Despite the bipartisan victory, the bill’s journey through the Senate was anything but smooth. Democrats initially withheld support due to revelations that an Abu Dhabi-backed firm was purchasing $2 billion worth of stablecoins from World Liberty Financial, a crypto firm linked to the Trump family. Concerns about corruption, transparency and ethical conduct quickly dominated the debate.
As CNN reported, leading Democratic voices such as Senator Elizabeth Warren of Massachusetts condemned the bill as dangerously underregulated. Warren warned that it lacked sufficient safeguards and could “supercharge” corruption, particularly given President Trump’s personal investments in the sector.
Senator Chris Murphy of Connecticut echoed these concerns stating that if Congress exempted the president from ethical scrutiny regarding cryptocurrency, it would be to blame for enabling institutionalised corruption.
Democrats fought for stronger provisions, including mandatory disclosure of stablecoin holdings by lawmakers and executive officials, a ban on public officials profiting from crypto while in office, and prohibitions on large technology firms issuing their own digital currencies.
However, Republican leaders, including Senate Majority Leader John Thune of South Dakota, ultimately blocked these amendments after internal disagreements threatened to derail the bill. As The Hill noted, more than 100 amendments were proposed, but very few were included in the final text.
A narrow path to passage
In early May, the bill’s trajectory was temporarily derailed when a group of crypto-friendly Democrats withdrew their support, objecting to the premature end of bipartisan negotiations. This led to intense behind-the-scenes talks that eventually resulted in a compromise version of the legislation.
One notable inclusion was the requirement for Congress and Executive Branch members to disclose stablecoin holdings exceeding $5,000. Additionally, the Treasury was tasked with creating formal rules to monitor suspicious transactions, addressing some—but not all—of the concerns from the Democratic camp.
Even with these changes, key Democrats such as Senators Warren and Chuck Schumer remained opposed. Warren insisted the legislation was insufficient to protect against financial abuses, likening it to the deregulatory policies that preceded the 2008 financial crisis. Meanwhile, Schumer acknowledged that although improvements had been made, critical anti-corruption provisions were still missing.
Republican Senators Rand Paul and Josh Hawley also voted against the bill, albeit for different reasons. Paul saw the regulation as unnecessarily restrictive, warning it would stifle innovation. Hawley objected to provisions he believed gave too much power to major tech companies, arguing that the bill’s regulatory board could still approve stablecoin issuance by firms like Amazon and Alphabet.
A legislative victory for the crypto industry
Despite lingering tensions and the absence of stronger ethical constraints, the Genius Act is widely viewed as a significant legislative win for the crypto industry. Industry leaders such as John Wu of Ava Labs praised the bill as foundational as The New York Times quoted him saying that it legitimises stablecoins and integrates them into the global monetary system.
The bill’s Senate passage has energised advocates in the House, where further debate and possible amendments are expected. According to CNN, House Majority Whip Tom Emmer has urged the Financial Services Committee to move quickly, aiming to advance stablecoin legislation by the end of July.
Representative French Hill, who chairs the committee, welcomed the Senate vote and committed to collaborating on a “functional regulatory framework.”
While the Genius Act still requires passage in the Republican-controlled House and the president’s signature before becoming law, its Senate success represents a crucial step forward.
As The Hill pointed out, the act also creates momentum for other pending crypto legislation, including the Clarity Act and the Stable Act, which together aim to delineate broader regulatory jurisdiction and bring more coherence to the digital asset ecosystem.
A tectonic shift in crypto policy
The Genius Act’s Senate approval has laid the groundwork for a new era in US financial policy, where digital assets are no longer relegated to the regulatory shadows. Though concerns about conflicts of interest and corruption persist—particularly regarding President Trump’s personal involvement in the crypto sector—supporters argue the bill advances essential consumer protections and secures American leadership in the evolving digital finance arena.
As Senator Tim Scott, chair of the Senate Banking Committee, stated, this achievement proves that principled, bipartisan cooperation can yield meaningful results for the American people. With the House now set to weigh in, the future of stablecoin regulation—and the broader role of cryptocurrency in the US economy—stands at a historic crossroads.