US Senate Banking Committee Passes GENIUS Act for Stablecoin Regulation

The US Senate Banking Committee has approved the GENIUS Act, legislation designed to regulate payment stablecoins, with a decisive 18-6 vote. Despite the voting down of dozens of Democrat-proposed amendments during the markup session, the bill received substantial bipartisan backing. A key development in the latest iteration is the exclusion of stablecoins that offer interest or yield.

The legislative pathway now points toward obtaining President Trump’s signature by late April. While several procedural hurdles remain, including a full Senate vote and integration with the House’s STABLE Act, the strong Democrat support in committee suggests a favorable outlook for passage.

The markup session began with approval of a bipartisan amendment package addressing several key concerns. Many Democrat-specific proposals were rejected because they overlapped with provisions already incorporated in different forms within the legislation. Some focused on ensuring stablecoin issuers hadn’t violated sanctions or facilitated illegal activities, topics partially addressed by the approved “integrity” assessments for issuers.

Several rejected amendments were deemed better suited for a separate crypto market infrastructure bill. This includes regulations concerning offshore stablecoins used within US markets. The current bill does, however, include provisions for reciprocal stablecoin issuance arrangements with other jurisdictions.

Senator Elizabeth Warren presented multiple proposals and expressed dismay over reports that the Trump family had discussed potential stablecoin issuance with Binance, which previously faced a $4.3 billion fine.

The committee’s work reflected substantial prior bipartisan discussions. Some Democrat proposals were withdrawn after Senator Hagerty, the bill’s sponsor, committed to incorporating their concerns. This included working with Senator Kim on amendments to prevent stablecoin issuers from enabling drug cartel activities.

“to ensure that issuers annually certify that they’re not enabling such activity subject to civil and criminal penalties. So I also commit to working with Senator Kim to establish a comprehensive anti-money laundering and elicit finance framework that would be applicable to the entities beyond the issuer in the digital assets ecosystem in future pieces of legislation that would include but not be limited to a forthcoming market infrastructure bill”, stated Senator Hagerty.

Senator Alsobrooks has joined as the second Democrat co-sponsor alongside Senator Gillibrand, who doesn’t serve on the Banking Committee. Hagerty noted ongoing collaboration with Alsobrooks regarding technical consumer protection applications.

The approved bipartisan amendments at the session’s start aimed to:

– Clarify treatment of payment stablecoins not issued by permitted issuers
– Assess competence, experience, and integrity of key leadership at applicant companies
– Prohibit deceptive naming of payment stablecoins
– Maintain status quo regarding Federal Reserve master account access
– Grant stablecoin customers super priority over other creditors in bankruptcy
– Clarify stablecoin reserve requirements

The notable addition to the GENIUS Act excluding interest or yield-bearing stablecoins suggests these instruments may be classified as securities under separate regulatory frameworks, though the bill doesn’t explicitly prohibit them.

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