The Genius Act just cleared cloture in the Senate, but does this really mark the start of coherent U.S. crypto regulation?
Table of Contents
Senate pushes through cloture, jumpstarting the stalled Genius Act vote
The US stablecoin bill promises clarity
Stablecoin issuers prepare for impact under the US stablecoin bill
Criticism rises as the crypto stablecoin bill senate vote draws attention
Senate pushes through cloture, jumpstarting the stalled Genius Act vote
After months of political back-and-forth, the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025, or the GENIUS Act, has cleared one of its most important hurdles. On May 19, the U.S. Senate voted 66 to 32 in favor of invoking cloture, a procedural step that allows the bill to proceed to a full floor vote. The outcome marked a sharp turnaround from just weeks earlier, when the bill appeared stalled following a failed May 8 vote that ended 48 to 49. Originally introduced on February 4 by Senator Bill Hagerty, the GENIUS Act was presented as a bipartisan effort to establish clear rules for stablecoin issuance in the U.S. Early momentum came from a coalition of Republican and Democratic lawmakers, along with vocal backing from the Trump administration. President Trump and David Sacks, who currently leads the White House’s Crypto and AI policy, have consistently described stablecoin regulation as a national priority. They argue that bringing dollar-backed stablecoins under a federal framework is essential to preserving the dollar’s role in global digital finance. Despite early optimism, the bill faced strong resistance, leading to the failed May 8 vote and triggering a round of amendments that addressed key concerns. The revised version now includes stricter anti-money laundering requirements, a ban on marketing yield-generating stablecoins to retail investors, and the creation of a federal Stablecoin Certification Review Committee to align oversight between federal and state authorities. These revisions were enough to gain the support of several Democratic holdouts, including Senators Mark Warner and Ruben Gallego, allowing the bill to clear the 60-vote threshold required for cloture. With that barrier lifted, the GENIUS Act is now expected to proceed to a final Senate vote, which could take place within days. If passed, the bill will advance to the House of Representatives before reaching President Trump’s desk. The potential implications are far-reaching not only for U.S.-based crypto firms but also for international issuers aiming to operate in the world’s largest economy. To understand what is truly at stake, it is important to explore what the GENIUS Act seeks to achieve, the political hurdles it has encountered, and how it may reshape the stablecoin market for both domestic and global participants.
The US stablecoin bill promises clarity
The GENIUS Act seeks to define how stablecoins can legally operate within the U.S. financial system by creating a dedicated federal framework for a new category called “payment stablecoins.” The Act explicitly states that these stablecoins are not securities, commodities, or investment products. As a result, they fall outside the jurisdiction of the SEC and CFTC and are instead regulated within a payment-focused framework. Only entities classified as Permitted Payment Stablecoin Issuers (PPSIs) will be authorized to issue these tokens. The Act identifies three eligible categories of issuers. The first includes subsidiaries of insured banks that are approved by federal regulators such as the Federal Reserve. The second covers non-bank entities supervised by the Office of the Comptroller of the Currency (OCC). The third consists of state-regulated issuers operating under rules deemed “substantially similar” to federal standards. This determination will be made by a newly established body known as the Stablecoin Certification Review Committee. A major update introduced in the May 1 version of the bill directly addresses concerns raised earlier in the year. The revised language places stronger emphasis on anti-money laundering compliance. Issuers will be required to conduct due diligence on large transactions, retain transaction records for at least five years, and maintain AML programs that comply with the Bank Secrecy Act. They also face criminal penalties for knowingly submitting false reserve certifications. FinCEN, the agency responsible for enforcing AML rules, is expected to issue new guidance within 18 months, which may include tools such as blockchain analytics and AI-based monitoring. Consumer protections have been expanded. In the event of an issuer’s bankruptcy, stablecoin holders will take priority over other creditors. Legal safeguards will also ensure that redemptions are processed without delay. The bill prohibits misleading marketing practices, including any claims that imply FDIC insurance or promote yield-bearing stablecoins to retail users. To reduce systemic risk, the bill imposes a temporary ban on algorithmic stablecoins. The Treasury has been tasked with completing a comprehensive review by the end of 2025. Until then, only payment stablecoins backed by verifiable reserves will be allowed. The GENIUS Act assigns new responsibilities to the Financial Stability Oversight Council. The FSOC will be required to assess systemic risks posed by both domestic and foreign stablecoins in its annual reports. These evaluations may lead to closer scrutiny of entities based in jurisdictions with weaker regulatory oversight.
Stablecoin issuers prepare for impact under the US stablecoin bill
Currently, U.S. dollar-backed stablecoins account for approximately $250 billion in circulation worldwide. That figure is projected to approach $400 billion by 2030, and the GENIUS Act could serve as a major catalyst for that growth. Firms with existing compliance infrastructure, such as Circle—the issuer of USD Coin (USDC)—are likely to benefit early. Many of their current practices, including reserve disclosures and anti-money laundering protocols, already align with the Act’s baseline requirements. One provision that further supports established financial institutions is the removal of the SEC’s former SAB 121-style accounting treatment. Under the new rules, banks will not be required to list custodied stablecoins as liabilities on their balance sheets. This adjustment could reduce capital burdens and allow more traditional financial firms to enter the stablecoin space. In contrast, newer or smaller firms may find the compliance threshold significantly higher. The Act mandates that stablecoin reserves must be held entirely in safe, highly liquid assets such as U.S. currency, Treasury bills with maturities under 93 days, and insured bank deposits. These requirements reduce systemic risk but also constrain how issuers can earn yield, creating a tension between financial stability and operational profitability. Compliance costs present another challenge. Medium-sized issuers are projected to spend between $5 million and $10 million annually to meet the Act’s regulatory standards. Larger institutions may be better positioned to absorb these expenses, which could place additional strain on smaller competitors. Over time, this dynamic may lead to market consolidation, with a shrinking number of dominant issuers. The Act introduces a dual oversight framework that offers some flexibility. Issuers with stablecoin market capitalizations below $10 billion may operate under state regimes, provided those frameworks are formally certified as aligned with federal standards. Issuers that exceed this threshold will typically come under the direct supervision of the Office of the Comptroller of the Currency. A waiver may be granted in some cases if firms can demonstrate strong capital adequacy and compliance performance. Foreign issuers face a different set of requirements. The GENIUS Act mandates that international stablecoin providers either comply with U.S. enforcement directives or operate from jurisdictions that uphold comparable regulatory standards. Countries with established regimes, such as those in the European Union under MiCA, may qualify under this provision. Others may not. Non-compliance carries steep penalties, including fines of up to $1 million per violation and the possibility of being excluded from U.S. markets, pending designation by the Treasury. The provision targets longstanding concerns around offshore issuers, especially those with large market shares but limited transparency. Tether (USDT), which currently accounts for more than $143 billion in circulation, has repeatedly faced questions about its reserve practices. Under the GENIUS Act, such issuers may be barred from operating in the U.S. unless they restructure or come into compliance. Some may respond by establishing U.S.-based subsidiaries that fall under the federal framework. Others may choose to scale back U.S. exposure entirely, especially given the projected compliance costs, which could range between $10 million and $20 million to secure and maintain market access.
Criticism rises as the crypto stablecoin bill senate vote draws attention
The bill has drawn sharp criticism from lawmakers, regulators, policy analysts, and consumer advocacy groups. One of the most vocal opponents has been Senator Elizabeth Warren. In a memo dated May 19 addressed to the Senate Banking Committee, she warned that the bill could open the door to what she described as “Trump crypto corruption.” Her concerns are partly rooted in the Trump administration’s open support for stablecoins like USD1, a privately backed initiative supported by several pro-crypto allies. Warren argues that, without stronger guardrails, large technology companies such as Meta or X could enter the stablecoin market under weak oversight, potentially posing risks to consumer protection and financial stability. The Atlantic Council’s GeoEconomics Center has also flagged what it calls the “Tether loophole” in the GENIUS Act. Their analysis points out that the current language allows foreign issuers to remain active in U.S. markets simply by complying with law enforcement directives. This provision means that offshore firms like Tether, which commands a dominant share of global stablecoin circulation, may continue operating in the U.S. without adhering to the full reserve and audit standards required of domestic issuers. Critics argue that this uneven compliance structure could create a competitive imbalance and undermine the bill’s goal of reducing systemic risk. The dual regulatory model has also come under scrutiny. The structure permits both state and federal oversight paths, which has raised concerns among policy groups. From an innovation standpoint, some voices within the decentralized finance community have pushed back against the bill’s temporary ban on algorithmic stablecoins. They argue that the restriction is too broad and punishes the wider DeFi ecosystem for the collapse of specific projects like TerraUSD. International coordination is another unresolved issue. Although the GENIUS Act now includes reciprocity requirements for foreign issuers, critics say it lacks the kind of joint supervisory mechanisms seen in Europe’s MiCA framework. Without deeper engagement with jurisdictions like the European Union, Singapore, or Hong Kong, the Act may be limited in its ability to promote consistent global enforcement and prevent regulatory fragmentation.