Senate votes preliminary approval on GENIUS Act for stablecoin regulation
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The Senate passed the GENIUS Act for stablecoins on July 17, 2025, following its approval by the House on June 17. President Trump signed the bill into law on July 18, establishing a comprehensive federal regulatory framework for payment stablecoins in the United States.
The new law, which provides robust regulatory steps, has been met with both approval and concern. Key provisions include requiring issuers to be regulated by federal or state authorities, with reserve backing on a one-to-one basis by U.S. currency or equivalent liquid assets. Stablecoin holders have priority claims in bankruptcy over other creditors, and the Act forbids non-permitted issuers from issuing payment stablecoins in the U.S.
However, critics argue that the GENIUS Act does not adequately address consumer protections or potential conflicts of interest. Some compare the Act's framework to weaknesses of the nineteenth-century banking system, raising fears that stablecoins could destabilize the financial system. Transparency and illicit fund movement concerns remain, especially post-issuance secondary market trading, which remains largely unregulated.
During the Senate debate, Senator Gillibrand stated that the $TRUMP memecoin, a stablecoin issued by World Liberty Financial, which includes members of the Trump family, is illegal. Senator Warren, on the other hand, disagreed with the bill, stating its basic flaws remain unaddressed.
The vote for cloture, requiring the support of 60% of the senators present, was successful, with 66 senators voting in favour, 32 against, and two abstaining. Notable senators such as Gillibrand, Alsobrooks, Gallego, and Warner led the vote for Democrats, while Senator Andy Kim supported the bill at the Banking Committee level but did not support cloture.
Interestingly, a UAE company chaired by the country's national security advisor bought $2 billion of the stablecoin, raising questions about foreign influence. The new draft of the GENIUS Act includes wording to address stablecoins issued by BigTech firms without imposing an outright ban.
While the GENIUS Act has become law, key concerns persist about consumer protections, conflicts of interest, and secondary market regulation for stablecoins. Early results from a poll showed that 75% of people felt there were conflicts of interest, but the percentage seeing conflicts has since dropped to 60%. It is expected that these issues will continue to be debated as the implementing rules are issued and the law takes effect.
- The GENIUS Act, which has established a regulatory framework for stablecoins in the United States, has sparked discussions in policy-and-legislation and general-news, as it aims to provide stability in banking but faces criticisms about consumer protections and conflicts of interest.
- Senator Gillibrand voiced concerns about a stablecoin issued by World Liberty Financial, which includes members of the Trump family, stating that it is illegal, while Senator Warren argues that the bill's basic flaws remain unaddressed.
- The passage of the GENIUS Act has raised concerns about foreign influence, as a UAE company, chaired by the country's national security advisor, bought $2 billion of the stablecoin.
- Although the Act has addressed some legal aspects of stablecoin issuance, it has left the regulation of post-issuance secondary market trading largely unaddressed, which remains a concern for transparency and illicit fund movement.
- As the implementing rules for the GENIUS Act are being issued and the law takes effect, ongoing debates about consumer protections, conflicts of interest, and secondary market regulation for stablecoins are expected, with recent polls showing that a majority of people still see conflicts of interest (60%) in the system.
