What impact does GENIUS bill pass by the US Senate have on the crypto industry?

Deng Tong, Golden Finance

On Tuesday local time, the U.S. Senate passed the landmark GENIUS Act, which promoted the U.S. federal government 's regulatory efforts on stablecoins and put pressure on the House of Representatives to plan the next phase of its national efforts to regulate digital assets.

This is the first time that the Senate has passed important cryptocurrency legislation. Republican Senator Bill Hagerty, the sponsor of the GENIUS Act, thanked some of his colleagues for their support before the official vote. Next, the House needs to decide how to move forward. It is unclear whether the stablecoin bill will be passed in the House with enough support, as Republicans also have a slightly higher majority in the House than Democrats.

What are the profound impacts of the passage of the GENIUS Act on the crypto industry? What do industry insiders think about the passage of this bill?

1. Review of the seven key points of the GENIUS Act

On February 4, 2025, Senator Bill Hagerty (R-Tennessee) proposed the "Guiding and Building a U.S. Stablecoin National Innovation Act" ("GENIUS"). The bill was co-sponsored by Senate Banking Committee Chairman Tim Scott (R-S.C.), along with Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-Wyoming), based on a discussion draft released by Senator Hagerty in October 2024. The legislation establishes a federal licensing and regulatory framework for payment of stablecoins and their issuers.

Here are the seven key points of the GENIUS Act:

1. The bill prohibits any non-"approved payment stablecoin issuer" from issuing payment stablecoins in the United States.

2. The bill defines a “payment stablecoin” as a digital asset that maintains fixed value through fiat currency or other security reserve support.

3. The bill imposes federal standards on institutions that are allowed to issue payment stablecoins, including requirements for fully supporting reserves, reserve quarantine, monthly certification, and capital and liquidity requirements, and prohibition of remortgage.

4. The bill allows state-regulated payment stablecoins issuers to issue stablecoins, provided that the applicable regulatory system is basically similar to the federal system.

5. The bill gives federal banking institutions the power to enforce the issuance of payment stablecoins, similar to the powers of Section 8 of the Federal Deposit Insurance Act to depositary institutions, their holding companies and affiliates.

6. The bill sets out customer protection standards for those who provide custody services for stablecoins approved for payment, including supervision and regulation, funding isolation, mixed prohibition standards, and monthly audit reports of statutory reserves.

7. The bill prohibits federal banking institutions, the NCUA and the SEC from requiring custodial assets to be considered liabilities. The bill also amended the federal securities laws, which clearly stipulate that payment stablecoins are not securities.

The GENIUS Act represents a milestone move by the federal government to regulate the U.S. payment stablecoin industry by creating clear licensing and regulatory requirements. The bill balances federal and state regulatory powers, ensures transparency through audits and reporting, and establishes a clear mechanism for enforcement.

If payment stablecoins are recognized in the U.S. regulatory framework, this could open the door for businesses to issue their own tokens. According to reports, Apple, Google, social media platforms X and Airbnb are studying the matter during the GENIUS debate, and the two U.S. senators question whether Meta will have the same plan if the bill is passed.

2. Exploration on the specific significance of the GENIUS Act

1. Provide regulatory clarity

The GENIUS Act ended a vicious turf battle between the Federal Reserve and the U.S. Securities and Exchange Commission that has frozen product development for many years. By providing a bank-like license to any issuer holding $10 billion or more assets, the bill provides regulatory clarity that allows us to truly plan for the future rather than waiting for enforcement actions to set rules. Statutory redemption rights and reserves audited by the US Public Companies Accounting Oversight Board (PCAOB) give stablecoins the same legal status as money market funds. This is not only beneficial to consumers, but also crucial to payment service providers that require reliable settlement channels.

2. Build a bridge between traditional payments and blockchain

The GENIUS Act will establish a regulatory system for stablecoins that allows issuers to register with the U.S. government. In addition, issuers must provide 1:1 guarantees for their stablecoins, undergo regular audits, and comply with anti-money laundering regulations.

OKX US CEO Roshan Robert said the GENIUS Act is a "strong signal" that the U.S. government is taking a pragmatic approach to digital asset innovation. The bill "builds an important bridge for traditional finance to explore blockchain payments and settlements." “The GENIUS Act not only supports licensing innovation, but also lays the foundation for interoperability between centralized and decentralized systems – an inevitable future we believe.”

Stablecoins are often seen as the key bridge connecting traditional finance and digital assets. These fiat-pegged tokens (mostly the dollar) allow people around the world to easily send money across borders at a lower fee and pay for items at various merchants.

3. Lead the formulation of rules for the next generation of global

financial system

The GENIUS Act could lay the foundation for the regulation of decentralized, programmable currencies, which could hit the outlook for the US Central Bank Digital Currency (CBDC).

"The stablecoin bill is equally important. Major financial institutions have begun to explore issuing stablecoins, and clear federal regulatory measures will legalize stablecoins and make them a new type of programmable currency — integrated into payments, settlements, and even fund management. If the United States can do this, it will not only lead the cryptocurrency market, but also set rules for the next global financial system. "

4. Strengthen the global financial position of the US dollar

Discussions over “de-dollarization” (i.e., the world may get rid of its dependence on the dollar as a global reserve currency) have been growing since Trump imposed tariffs on trading partners. Supporters of the bill say that given that most stablecoins are pegged to the dollar, the bill could strengthen the dollar 's status, which could potentially enhance its influence in the digital economy.

According to DefiLlama, the two largest stablecoins in the cryptocurrency space are pegged to the US dollar—Tether’s USDt and Circle’s USDC have a total market value of US$217.5 billion, accounting for 86.4% of the total stablecoin market value of US$251.7 billion.

"The de-dollarization discussion ignores a more important point: dollar- backed stablecoins are the new financial tool of the 21st century, " said Bill Sebell, executive director of the XDC Foundation. " If the GENIUS Act is passed, then now "anyone with a smartphone can hold a compliant digital dollar, which will increase the coverage and relevance of the dollar as critics predict the dollar will depreciate."

5. Impact on the crypto market

" Recent reports predict that the stablecoin market size could reach $3.7 trillion by 2020. This is more likely to happen with the passage of the GENIUS Act."

1confirmation founder Nick Tomaino posted on the X platform that the GENIUS bill is very beneficial to cryptocurrencies, and the market value of stablecoins will increase rapidly by 10 times.

3. Criticize or agree? What do industry insiders view this historic

moment?

criticize:

On the one hand, critics argue that the GENIUS Act lacks sufficient safeguards, especially when entities authorizing the issuance of stablecoins may conduct self-transactions.

• Senator Elizabeth Warren, who has been one of the most outspoken opponents, warned that the bill could “actively fuel” abuses related to Trump’s cryptocurrency business.

• Amanda Fischer, policy director and chief operating officer (COO) of Better Markets, believes that the GENIUS Act passed by the Senate puts consumers, investors and the economy at risk. Stablecoins are not the "future of payment". Instead, they represent an unstable future, almost ignoring the unsuspecting ordinary Americans and the economic guardrails they rely on. The GENIUS Act advocates the use of stablecoins, but failed to solve problems in the crypto market in several months, such as stablecoin companies being susceptible to runs, bankruptcies and bailouts that require taxpayers. The bill also encourages the use of stablecoins to purchase goods and services, but does not apply any law that provides consumer protection in the payments field. Under the proposed law, large tech companies and non-financial companies may issue their own currencies, raising concerns about fair competition, data privacy and surveillance. The GENIUS Act and its supporters have also failed to address the myriad national security risks unique to cryptocurrencies, while also providing loopholes for opaque foreign stablecoins such as Tether. The House should veto the legislation.

On the other hand, critics of the GENIUS Act argue that the bill hurts the decentralization of cryptocurrencies and can lead to corruption, such as officials favoring specific stablecoins under new regulations.

• " We need to have guardrails to make sure government officials don't publicly ask people to buy their coins to increase profits for individuals or families. Where are the guardrails in this bill? They don't exist at all."

Some critics also said the bill gives too many entities the ability to create new stablecoins, which could make the enforcement of regulatory standards more difficult.

Agree:

Supporters say this will help protect investors and regulate the stablecoin market and ensure that issuers have the reserves needed to give the stablecoin value.

• Treasury Secretary Bescent said on social media that “a booming stablecoin ecosystem will drive the demand for U.S. Treasury bonds from the private sector—and Treasury bonds are the source of asset support for stablecoins. This new demand may reduce government borrowing costs and help control national debt. It could also open the door to a US dollar-based digital asset economy for millions of users around the world. This is a win-win situation for all involved: the private sector benefits; the U.S. Treasury benefits; and consumers benefits. This is the result of wise, innovative legislation.”

• " If we don't take action now, these benefits will not only disappear, but we will also lag behind in terms of global competitiveness. Without a regulatory framework, stablecoin innovation will flourish overseas, not in the United States!" said Sen. Bill Hagerty, Republican of Tennessee who introduced the bill.

• Republican Senator Hagerty said: " The passage of this bill brings the United States one step closer to becoming a global leader in cryptocurrency. The GENIUS Act establishes a growth-friendly regulatory framework for payment of stablecoins. The bill will consolidate the dominance of the dollar, protect consumer rights, and drive demand for U.S. Treasury bonds."

• "A year ago, I even thought it was just a fanatical fantasy. Think about how far we have come."

• Patrick Gerhart, president of banking at Telcoin, said in an email that the GENIUS bill would be a major change in the stablecoin landscape. “It’s not necessarily quantity, it’s quality. Regulation opens the door to the emergence of new issuing institutions, but compliance, interoperability and practicality will ultimately determine the ultimate winner. It’s not only about who has the strongest funding or the loudest brand, but also about who can integrate with existing financial infrastructure to meet regulatory expectations and serve local people.” Gerhardt said that while banks and large tech platforms may have huge advantages from the start, “the real long-term value will come from stablecoins that enable programmable, low-cost and mobile-first financial services.”

• " This is a victory for the United States, a victory for innovation, and an important step for the United States to properly regulate digital assets," Amanda Tuminelli, executive director and chief legal officer of the DeFi Education Fund, said in a similar statement.

• Ryan Peters, assistant professor at Tulane University in New Orleans Freeman School of Business, pointed out: GENIUS is a necessary first step towards a mature stablecoin infrastructure. Whether a stablecoin can become a resilient payment medium or encounter setbacks in the first real stress test depends entirely on how much policy makers place their follow-up efforts.

• Erbil Karaman, co-founder of PayFi network Huma Finance, believes that the passage of the GENIUS bill in the Senate will be a "key turning point" and predicts that stablecoins will "beyond speculative trading and become an important financial infrastructure." In an email, he said DeFi’s summer is coming and it will be very different from the past.

• “Overall, the bill will work better than any current bill,” said Bezalel Eithan Raviv, CEO of blockchain security firm Lionsgate Network.

Source: Golden Finance, Reuters, Golden Hot Data, CoinTelegraph, CNBC, Covington, CoinDesk, Payments Dive, The Block, Better Markets, etc.