GENIUS Act Clears Senate Banking Committee, Moves to Full Congress and White House

Key Takeaways

• The GENIUS Act cleared the Senate Banking Committee in an 18-6 vote.
• The latest version clarifies stablecoin oversight.
• The bill introduces new transparency, enforcement, and compliance measures, including federal licensing and AML requirements.

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act cleared a key hurdle on March 13, passing the Senate Banking Committee with a bipartisan 18-6 vote.

The bill, introduced by Sen. Bill Hagerty (R-Tenn.) on Feb. 4, is aimed at establishing clear regulations for stablecoins at both the state and federal levels.

The legislation has gained the backing of Senate Banking Committee Chairman Tim Scott (R-S.C.), as well as Senators Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.).

It builds on a discussion draft released in October 2024, reflecting months of negotiations to balance innovation, consumer protection, and financial stability.

Full Congress Next: The Path to Becoming Law

Following the committee’s approval , the GENIUS Act now heads to both chambers of Congress before reaching President Donald Trump’s desk for final approval.

While the bill has received bipartisan backing, Democrats sought to introduce additional restrictions, many of which were rejected along party lines.

One key proposal, led by Sen. Elizabeth Warren, would have restricted stablecoin issuance to traditional banking institutions—a measure ultimately voted down.

“The bill invites scammers into the market by refusing to prohibit people convicted of fraud and money laundering from owning stablecoins,” Warren argued.

The Massachusetts senator asserted that without her changes, the bill would “supercharge the financing of terrorism.”

In response, Hagerty defended the bill as a necessary step to bring regulatory clarity to the fast-growing stablecoin market.

“It presents common-sense rules that protect consumers, promote competition, and foster innovation,” Hagerty said. “It’s time we provide the clarity and stability that our country and its innovators so desperately need.”

Key Revisions: Balancing Federal and State Authority

Sen. Hagerty introduced amendments to the GENIUS Act on March 10, which the Senate Banking Committee approved on March 13.

The updated version seeks to define regulatory oversight more clearly, granting state regulators primary authority over stablecoin issuers with market caps below $10 billion.

Larger issuers could remain under state oversight if they meet specific regulatory standards.

The bill also introduces federal licensing and enforcement measures for stablecoin issuers to enhance financial security and consumer protection.

These provisions are designed to strengthen market transparency and accountability while preserving state-level regulatory autonomy for smaller issuers.

Requirements for Stablecoin Issuers

The amended GENIUS Act mandates that stablecoin issuers adhere to stricter reporting and compliance requirements, including:

• Monthly Liquidity Reports: Issuers must disclose details on reserve composition and the total number of stablecoins in circulation.
• Reserve Composition Standards: Stablecoin reserves must be held in demand deposits, U.S. Treasury securities, U.S. dollars, or other approved assets.
• Transaction Freezing Compliance: Issuers must develop protocols to comply with orders to freeze transactions. The U.S. Treasury Secretary would have the power to block transactions involving stablecoins issued by foreign entities.
• AML and KYC Compliance: The bill designates stablecoin issuers as financial institutions for anti-money laundering (AML) purposes, requiring them to implement compliance programs and conduct due diligence on high-value transactions.

These measures expand on previous drafts of the bill, which already included enhanced Know Your Customer (KYC) and AML provisions.