In June 2025, the U.S. Senate made history by passing the GENIUS Act—formally known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act. With a decisive 68-30 vote, the Senate sent the legislation to the House of Representatives, marking the first time that Congress has approved a comprehensive federal framework specifically regulating stablecoins.
This move is more than just a legislative milestone for the crypto industry—it signals a shift in how digital assets are viewed by policymakers: from speculative playground to infrastructure requiring guardrails, transparency, and integration with the broader financial system.
At its core, the GENIUS Act lays down requirements for so-called payment stablecoins—digital assets designed to maintain a stable value (typically pegged to the U.S. dollar) and used for payments or settlement.
Key elements of the legislation include:
- Issuer eligibility: Only “permitted payment stablecoin issuers” (PPSIs)—domestic banks or non-bank entities approved by the Office of the Comptroller of the Currency (OCC)—can issue these stablecoins, unless certain conditions apply for foreign issuers.
- Reserve backing: The act mandates one-to-one backing of outstanding stablecoin issuance with safe and liquid assets—such as U.S. dollars, Treasury bills or insured deposits.
- Regulatory classification and oversight: A permitted payment stablecoin is neither a “security” under the federal securities laws nor a “commodity” under the Commodity Exchange Act. It places oversight under banking regulators (Fed, OCC, FDIC) and imposes compliance burdens comparable to financial institutions.
- State and federal coordination: Issuers under a threshold size (for example, under $10 billion in outstanding issuance) may opt into a state-level regulatory regime if it is “substantially similar” to federal standards.
- Prohibitions and marketing rules: The act prohibits misleading claims (such as state guarantee of value, FDIC-style insurance for token holders), bans issuers from offering interest or yield merely for holding a stablecoin, and gives stablecoin holders priority in insolvency proceedings.
These provisions aim to tackle risks that have materialised in recent years, such as reserve opacity, redemption failures, contagion risks from crypto platforms, and cross-border token issuance with unclear oversight.
For the crypto ecosystem, the passage of the GENIUS Act is a foundational moment. Stablecoins have become the backbone of many crypto platforms—used for trading, treasury management, cross-border payments, decentralised finance (DeFi) and beyond. Yet until now, the U.S. lacked a clear federal statute explicitly governing their issuance and oversight.
By putting guardrails around how payment stablecoins can be issued, backed and marketed, the legislation offers regulatory clarity—something that can drive institutional participation, infrastructure development and innovation in the U.S. rather than pushing it offshore.
For financial markets more broadly, the act signals that digital-asset infrastructure is no longer “niche.” Policymakers recognise that stablecoins could play a systemic role—settling payments, bridging fiat and crypto ecosystems and interacting with traditional banking and monetary systems. The U.S. is seeking to shape those dynamics rather than react after the fact.
Many crypto firms, stablecoin issuers and financial institutions welcomed the legislation as a “legitimising” step. With defined rules, issuers may be more confident in launching new products, banks may be more willing to support stablecoin programs, and investors may allocate with less regulatory uncertainty.
From a market perspective, clear regulation could expand stablecoin use beyond trading into real-world payments, tokenised assets, corporate treasury operations and cross-border remittances under compliant regimes. Platforms may evolve from purely crypto-native to infrastructure that interacts with mainstream finance.
However, this also increases expectations of compliance: issuers will now face audit requirements, enhanced reserves, potential licensing and bank-style regulation. Firms that cannot meet these infrastructure and oversight demands may face competitive disadvantages.
Despite the strong vote in the Senate, several issues remain unresolved—and critics have flagged potential shortcomings.
One key concern is foreign-issuer treatment. Some versions of the legislation provide carve-outs or delayed application for stablecoins issued overseas, raising concerns about regulatory arbitrage and competitive disadvantage for U.S. issuers.
Another issue is consumer protection and financial stability. Some lawmakers and industry observers argue the regime still lacks robust measures for preventing large-scale stablecoin runs, ensuring rapid liquidity in redemption events, or accounting for contagion risks linking crypto and traditional finance. Senators such as Elizabeth Warren have voiced concerns that big-tech firms might issue stablecoins under the regime without facing the same constraints as banks, potentially inviting concentration risk.
Additionally, the legislation is focussed on payment stablecoins—tokens meant for payments or settlement—and may not capture all forms of pegged digital assets or asset-backed tokens. For example, tokens used purely for DeFi yield or protocol governance may remain in a regulatory blind spot.
The Senate’s passage is a major step, but the process is not complete. The legislation now moves to the House of Representatives. Given the House’s different priorities, amendments or reconciliation may be required before final passage and signature into law. Once enacted, regulators will need time to implement rules—often via notice-and-comment rulemaking—and industry players will need time to gear up compliance, reserves, custody and issuance infrastructure.
Meanwhile, stakeholders will watch for:
- Final House action: Will the House pass the act broadly or attach further crypto market-structure reforms?
- Regulatory rule-making: How will the Fed, OCC, Treasury and state regulators translate statutory language into operational rules?
- Market reaction: Will issuers prepare compliant stablecoin programs inside the U.S.? Will institutional capital allocate differently based on clear regulation?
- Competitive dynamics: How will foreign issuers respond? Will U.S. firms enjoy a first-mover advantage, or will complexity slow adoption?
- Systemic risk monitoring: How well do the new rules prevent a redemption shock or contagion event from a large stablecoin or issuance platform?
The Senate’s advancement of the GENIUS Act is a turning point for the crypto industry and for how digital assets interface with the financial system. By defining a federal framework for payment stablecoins—with backing requirements, regulatory oversight and guardrails—the U.S. has taken a major step toward bringing digital-asset innovation under established financial-system standards.
For issuers, investors and platforms, this means less regulatory fog and potentially more opportunity. For regulators and policymakers, it means acknowledging that stablecoins are not fringe tokens but infrastructure that merits serious oversight. For the broader financial system, it means the possibility of combing speed and international scale of blockchain with the stability and transparency of regulated finance.
But the passing of the Senate vote is not the finish line. Implementation, rule-making, and industry execution will determine whether the framework delivers the balance of innovation and protection promised. In the months ahead, crypto firms, regulators and markets will test how effectively stablecoins can operate under this new regime—and whether the U.S. can set a global benchmark for digital-asset regulation.