The US stablecoin legislative game, is it welcoming the innovative revolution or sounding the alarm?

_Author: Guo Liqin, Researcher of "Financial" _

Editor: Zhu Tao

Since late May, with the key progress in stablecoin legislation in the United States and Hong Kong, China, a new round of pursuit of cryptocurrencies represented by stablecoins have been set off in the global financial market.

Fans believe that this means that cryptocurrencies have taken an important step to integrate into the global mainstream financial markets, and blockchain technology will reshape the traditional financial payment system; while doubters believe that compared with the cost reduction and efficiency improvement brought by cryptocurrencies, the security challenges it brings still need to be measured. The game between all parties will accompany the US legislative process and move from behind to front one after another.

On the evening of May 19 local time , the U.S. Senate held a key procedural vote on the stablecoin regulation bill, and passed it with 66 votes in favor and 32 votes against. The bill is officially named "Guiding and Establishing the National Innovation Act of the United States Stablecoin" (hereinafter referred to as the GENIUS Act), and will regulate U.S. stablecoin issuers at the federal level.

Later, David O. Sacks, the White House director of cryptocurrency and artificial intelligence, further released positive expectations, saying that the GENIUS bill would be passed with "strong support from both parties" and boost market demand for U.S. Treasury bonds. Sax views the bill as a national economic strategy that will enhance the US dollar's network dominance.

On March 7, 2025, David Sachs, director of cryptocurrency and artificial intelligence at the White House, spoke to the media about the executive orders on digital currencies and U.S. digital asset reserves. Photo/Visual China

The "stable currency" in the bill is a cryptocurrency anchored to stable assets (such as the US dollar, gold, etc.) designed to reduce price volatility and provide a stable store of value and medium of transaction. Looking back, the birth of stablecoins is to cope with the extreme volatility of cryptocurrencies such as Bitcoin and Ethereum. The most well-known stablecoins are USDT issued by Tether and USDC issued by Circle, both of which are 1:1 anchored to the US dollar, and the two together account for about 90% of the global stablecoin market value. According to reports from multiple institutions, the total global stablecoin market value has increased by more than 22 times in the past five years to nearly US$250 billion.

On May 21, the Legislative Council of the Hong Kong Special Administrative Region officially passed the "Stablecoin Bill", becoming the first regulation in the Asia-Pacific region to comprehensively regulate stablecoins. On May 30, the Hong Kong Special Administrative Region Government published the Stablecoin Ordinance in the Gazette, which means that the Stablecoin Ordinance officially came into effect and became a law.

The financial market is the first to usher in a boom. On May 22, Bitcoin rose above the $110,000 mark, breaking the record high set when Trump took office on January 20. On June 2, in the Hong Kong stock market, stablecoin concept stocks collectively rose, with Lianlian numbers rising by 80% at one time, Yika rose by nearly 50% at one time, and Oke Cloud Chain once rose by more than 45%. On June 3, the concept of A-share digital currency was repeatedly active.

On June 5, local time , USDC issuer Circle was listed on the New York Stock Exchange under the stock code "CRCL", which is the first IPO in the stablecoin field. The opening price on the first day soared by 122.58% to $69, and the highest intraday hit US$103, with the largest increase of 234.68%. Due to the excessive volatility of the price increase, Circle triggered a temporary circuit breaker during the session, and the final stock price closed at US$83.23, a single-day increase of 168.5%, and its total market value exceeded US$18 billion.

But it has been more than three weeks since the last time the US stablecoin legislation was promoted , and relevant parties are still playing games. Questioners continue to attack the conflict of interest caused by the Trump family's entry into the stablecoin market. Other accusations include corruption, money laundering, fraud scandals, and the "transparency" of the stablecoin itself. The latest development is that Senate Majority Leader John Thune plans to launch a new round of key procedural votes on the bill as early as June 11 local time .

1. Legislation progress is less than expected

Although Trump has shown support for the cryptocurrency industry since his second term, he still needs to compromise with Congress on the legislative process.

According to aesthetic scholar Sun Yuanzhao, Trump's call for accelerated legislation may substantially affect Republican lawmakers because if they do not comply, they may be regarded as "betrayal." But since the Republican Party is currently only a minor majority in both houses, if the bill is to be passed, it must also receive the support of some Democratic lawmakers.

The introduction of a new law by the US Congress often requires a long political struggle. In terms of procedure, it must go through multiple consultations and compromises during the deliberations between the Senate and the House of Representatives. The stronger the consensus between the two parties, the easier it is to pass the law. Previously, the market widely believed that the Legislative Council, which received more bipartisan support, had the earliest breakthrough.

Cryptocurrencies generally include five types: stablecoins, central bank digital currencies, financial products and real-world asset tokenization ( RWA), tokens without off-chain assets (Bitcoin, Ether) and meme coins (Trump currency, Dogecoin). During the last U.S. Congress, since the vast majority of stablecoins were anchored to US dollar assets, helping the US dollar maintain its position as the global dominant currency, the relevant legislation received more support from both parties. From a market perspective, stablecoins have also received widespread attention in cross-border payments, cryptocurrency transactions, transfers between digital asset exchanges, and store of value in countries where US dollar use may be restricted.

The GENIUS Act was initiated by a bipartisan group including Senators Bill Hagerty and Tim Scott on February 4, 2025 local time. The bill determines federal or state regulators based on the size of stablecoin issuance, and generally adopts bank-like regulatory requirements for issuers.

Key points of the early version of the bill include: 1. Defining a payment stablecoin as a digital asset for payment or settlement (not a "securities") that is anchored to a fixed currency value; 2. Establish clear procedures for institutions seeking licenses for issuing stablecoins; 3. Implement reserve requirements for stablecoin issuers, with the total value of reserves at least equal to the amount of stablecoin in circulation, and issuers issue monthly proofs executed by independent auditors to confirm the adequacy of reserves; 4. For issuers who issue stablecoins over $10 billion, adopt the regulatory framework for deposit institutions by the Federal Reserve (Fed) and the framework for non-bank issuers by the Office of the Regulatory Commissioner of the Currency (OCC); 5. Allow state-level supervision of issuers with market value below $10 billion, and provide exemptions for issuers with exceeding this threshold to continue to be regulated by the state-level, etc.

To date, two key procedural votes for the GENIUS Act have been passed because of bipartisan support.

On March 13, local time , the US Senate Banking Committee quickly passed the GENIUS Act with an 18-6 vote, which is the first step for the bill to become a law ( see details: US cryptocurrency legislation has made a breakthrough. How much role has Trump played? ) . The current members of the U.S. Senate Banking Committee include 13 Republicans and 10 Democrats. In this vote, except for all Republican members, five other Democratic members also voted for the bill.

The second step of the bill passing the procedural voting of the Senate on May 19 will be the second step, and it will enter many processes such as the Senate voting and House of Representatives before Trump can officially sign it into law. Although this progress has caused a stir in the cryptocurrency market and mainstream financial markets, three weeks have passed and the bill has been slow to move to the next step, which also shows that the final passage is still full of variables.

After the GENIUS Act was passed by a procedural vote in the Senate, the outside world once believed that the bill could enter and pass the Senate vote within a week, and even enter the Trump signing stage in a few weeks. For example, Senator Cynthia Lummis, one of the main supporters of the bill, once said that passing the bill before May 26 (Memorial Day) is a "fair goal."

Sun Yuanzhao believes that the speed of stablecoin legislation is lower than expected, which first means that there are many levels of "bargaining" behind it. In his opinion, the next critical time point for the legislative breakthrough may be before July 4 (US Independence Day) and before August. At the White House cryptocurrency summit on March 7, Trump urged lawmakers to pass stablecoin legislation before the August recession, providing regulatory certainty for the US dollar-backed stablecoins and digital asset markets.

2. Game and controversy behind legislation

In fact, the two votes that the bill has been passed have also experienced behind-the-scenes communication and game.

On May 8, several Democratic senators once blocked the advancement of the GENIUS bill due to concerns that Trump's cryptocurrency companies and the bill's anti-money laundering provisions may have conflicts of interest. At that time, the proposal, which required 60 votes to be passed procedurally, received only 48 votes due to opposition from all Democrats and three Republicans. After the bill encountered resistance, Republicans and Democrats continued to negotiate, eventually introducing a new draft amendment over the weekend that received enough support from Democrats before pushing forward the bill on May 19.

The revised GENIUS Act responded to many previous hot topics, including increasing demand for short-term US Treasury bonds, strengthening the dollar 's global reserve currency status, and revising the "anti-money laundering" regulations and preventing technology giants from illegal issuing stablecoins, but there is still controversy.

A research report recently issued by Deutsche Bank to Finance believes that first of all, the GENIUS Act strengthens the dominance of the US dollar, stipulating that all stablecoins must be anchored to high-quality and low-risk current assets (US Treasury bonds due within 93 days, insured bank deposits or physical US dollar cash), and the issuer must regularly disclose currency reserves every month. The bill codifies the standards that have been widely adopted by industries such as Tether, which not only supports the short-term US bond market but also promotes the global liquidity of the US dollar.

Secondly, the revised bill prohibits technology companies such as Meta and Apple from issuing stablecoins unless they meet strict conditions such as financial risks and user data privacy, reflecting deep concerns about technology giants that may use their data monopoly position to control financial infrastructure. This also means that the US government wants to maintain the hegemony of the US dollar, but also curb the potential threat of private technology giants to monetary sovereignty.

In addition, the bill strengthens the supervision of stablecoin issuing institutions abroad in the United States, and points directly to the industry leaders. The bill authorizes the U.S. Treasury Secretary to jointly supervise overseas issuers with the newly established "Stable Coin Certification Review Committee", which plugs the original legal loopholes. Previously, the United States allowed offshore issuers to continue operations by restricting stablecoin transfers when required by law enforcement. This means that offshore institutions such as Tether must comply with the exact same regulatory standards as domestic U.S. stablecoin suppliers.

However, there are still some controversies to be resolved in the revised bill. The aforementioned report shows that, on the one hand, the bill explicitly prohibits the payment of income or interest by regulated stablecoins . This restriction could prompt funds to flow from stablecoins to tokenized money market funds, an interest-generating tool linked to underlying assets. Despite legislative bans, market innovation continues to emerge. Interest-generating stablecoins issued by institutions such as Spark Protocol and Figure Markets are developing rapidly, accounting for 2.8% of the US$247 billion stablecoin market (largely $5.9 billion) as of May 21.

On the other hand, although the bill strengthened anti-money laundering and national security provisions after its amendment, it did not resolve the conflict of interest disputes caused by Trump, which had previously blocked the bill. Democrats continue to criticize the conflict of interest in the bill involving Trump and his family. Trump 's financial dealings with multiple crypto projects —including the USD1 stablecoin issued by "World Free Finance" under his family control and a number of "Internet celebrity coins"—has raised concerns that the legislation could deliver economic benefits to politicians.

After the vote, Democratic Senator Elizabeth Warren condemned the bill to “encourage Trump’s corruption.” She pointed out that the USD1 stablecoin could become a shadow banking tool for "anonymous overseas middleman" to send funds to Trump and his affiliates. Since its launch on March 25, USD1's market value has soared from US$128 million on April 28 to US$2 billion in May, jumping to the seventh place in the stablecoin market value rankings. The US$2 billion cooperation agreement reached by its issuer "World Free Finance" and the UAE MGX Fund on May 1 directly boosted the surge in the stablecoin.

In Sun Yuanzhao's view, another reason that affects the process of the GENIUS Act is that the higher priority of the Federal Government Budget (One Big Beautiful Bill Act), namely the "Big and Beauty" Act, occupied more legislative resources. "Budget, tax law and immigration law, these three things are enough to make all the members of parliament be in a hurry."

Zhu Keliang, head of the Silicon Valley office of Deheng Law Firm, believes that unless the United States can pass the "Big and American" bill within the next one to two months , the possibility of passing the stablecoin law this year is very small.

On May 22, the U.S. House of Representatives passed the "Big and American" bill with one vote. The bill contains several provisions and has more than 1,000 pages of content. The bill will extend the corporate and individual tax cuts passed by Trump in 2017 during his first presidency, provide new tax cuts on tips, auto loans, etc., while increasing defense spending and providing more funds to combat illegal immigration.

In addition to the Senate, the House of Representatives also has several similar draft legislation that are to be passed, the most well-known is the revised STABLE Act. During the last Congress, both parties strongly supported the stablecoin-specific regulatory framework, namely the STABLE Act. House Financial Services Committee Chairman French Hill released an amendment to the bill in February. On March 11, the House held a hearing to discuss the integration of several drafts in advance.

According to five lawyers including Margo Tank, the lawyer in charge of financial technology at Ouhua Law Firm , the GENIUS Act and the STABLE Act are both aimed at establishing a legal framework for stablecoins. They define federal (or state) licensing and regulation requirements, including transparency and 1:1 reserve standards, redemption and consumer protection requirements, and compliance requirements such as anti-money laundering.

In order for these bills to become law, lawyers said, "they need to be passed in their respective Houses and coordinated with different versions passed by the House and Senate, and then signed by the president."

3. Is innovation unstoppable?

With the development of cryptocurrencies, how to effectively regulate cryptocurrencies, including stablecoins, has always been very controversial around the world. The core lies in how much compliance costs should be used to promote such innovation.

Another problem faced by global regulators is that once cryptocurrency supervision is strengthened, the relevant industrial chains will be transferred to countries and regions with a more relaxed regulatory environment.

The United States and Hong Kong, China, have taken the lead in taking the first regulatory step towards "promoting innovation".

In David Sax's view, stablecoins provide a new, more efficient, cheaper and smoother payment system—opening new payment tracks for the U.S. economy and expanding the dollar's dominance in new fields.

Xiao Feng, chairman and CEO (CEO) of HashKey Group and chairman of Wanxiang Blockchain Company, believes that whether it is the Stablecoin Regulations in Hong Kong, China or the Breakthrough of the GENIUS Act in the United States, essentially, both places recognize the concept of "monetary tokenization based on blockchain distributed ledgers."

In Xiao Feng's view, the US dollar stablecoin is the core interest of the US government. It has made the US dollar stablecoin legally operated through legislation, aiming to actively seize the emerging fields of cryptocurrencies and expand existing international application scenarios of the US dollar such as the "petroleum dollar".

The scale of stablecoins is indeed not to be underestimated. According to statistics from Changjiang Securities, as of May 1, 2025, the total scale of stablecoins was approximately US$227.37 billion, a year-on-year increase of 46.5%, with a relatively fast growth rate. As of early May, the rolling transaction volume of stablecoins on the 30th had reached US$2 trillion, exceeding traditional payment channels such as Visa and Paypal.

Changes on the industrial side have begun. Bank of America Securities pointed out in a recent research report that as the development of stablecoins gradually becomes clear, blockchain technology will reshape the payment ecosystem, and the traditional "five-party payment model" (merchants, acquisition institutions, card issuing institutions, card organizations and cardholders) will face an impact.

Bank of America Securities said that banks with blockchain technology capabilities can directly process transactions, and the economic value of traditional payment service providers will be weakened by blockchain infrastructure. Several of the largest U.S. banks are exploring the issuance of joint stablecoins, and JPMorgan has operated the blockchain-based digital payment infrastructure "Kinexys" for many years. As one of the largest custodial banks, New York Mellon recently launched a digital asset data insight product that publishes on-chain and off-chain data onto the blockchain.

Another important reason why the U.S. parties promote legislation is that rapidly growing crypto assets (including stablecoins) and their related business activities are regulated in the United States, but this regulation is inconsistent, bringing uncertainty to businesses and individuals in the ecosystem. For example, multiple regulators have different definitions of cryptocurrencies. The Securities and Exchange Commission ( SEC) regards it as securities, the IRS regards it as property, and the Commodity Futures Trading Commission (CFTC) regards it as a commodity.

In the view of Grant Thornton, a multinational consulting agency , market structure is another more complex area that cryptocurrency legislation needs to be addressed compared to stablecoins. Such legislation needs to be clearly defined when cryptocurrencies and tokens with no fixed value should be regulated by the SEC as securities, or as commodities by the CFTC. Bitcoin is the largest cryptocurrency with market capitalization to date, and it is regulated by the CFTC as a commodity, but the regulator mainly regulates futures and derivatives, with limited direct power over the spot market.

During the last Congress, the U.S. House of Representatives drafted and passed the 21st Century Financial Innovation and Technology Act (FIT21), making it the current legislative template. Grant Thornton believes that the SEC's cryptocurrency task force and Trump's cryptocurrency task force may play a role in formulating the legislation.

American law firm Wachtell Lipton believes that even if the US Congress passes relevant stablecoin bills, there are still challenges in the coordination of decentralized technology and centralized regulatory systems , including the replacement of decentralized finance ( DeFi ) for intermediary finance, real asset tokenization, and the operation of distributed autonomous organizations (DAOs). Moreover, there is fragility in the bipartisan consensus

• the United States Illinois follows New York's model to launch a strict BitLicense system (issuing business licenses for cryptocurrency activities) system, and the Oregon Attorney General sued the world's largest cryptocurrency trading platform Coinbase Exchange to "fill the federal regulatory vacuum" and other incidents.

4. Still need to prove "honest" and "safe"

The cryptocurrency industry, which claims to be disruptive to traditional finance but is full of fraud and money laundering scandals, is a real problem in how to convince a wider range of stakeholders with a safe, sustainable and compliant performance in the coming US legislative agenda.

On November 11, 2022, FTX, the world's second largest cryptocurrency exchange, declared bankruptcy due to a liquidity crisis. On December 12 of the same year, FTX CEO Sam Bankman-Fried was arrested in the Bahamas facing eight criminal charges. These allegations include telecom fraud, conspiracy to launder money and violations of federal campaign laws.

Bankman Fried's biggest fraud is to mix customer deposits on the FTX trading platform with assets of Alameda Research, a fund he founded. Alameda Research misappropriated billions of dollars in customer funds from the FTX exchange. This directly leads to insufficient FTX reserve funds, unable to withstand the customer's requirements for cashing out, and eventually going bankrupt. On March 28, 2024, the court sentenced Bankman Fried to 25 years in prison.

FTX's bankruptcy was once called the "Lehman Moment" of cryptocurrency by then-US Treasury Secretary Yellen. The entire cryptocurrency industry has suffered a "cold winter" in 2022, and the industry crisis has spread to almost all relevant institutions, markets or regions.

You should know that FTX's valuation exceeded US$30 billion at its highest in 2021. Bankman Fried was once known as the "king of cryptocurrency" and was included in the 2022 "Top 100 Influential People in the World" list of Time magazine.

The listing of the stablecoin issuing company Circle has also experienced "twist and twists and turns". In early 2022, Circle tried to go public with a special purpose acquisition company (SPAC), but coincided with the above-mentioned cryptocurrency burst, Bitcoin fell from $69,000 to $15,000, and Circle's listing plan was finally shelved.

At the end of 2023, there was a Silicon Valley banking crisis. At that time, the US$3.3 billion that Circle had existed in the bank was frozen for a time, causing the USDC to dean the anchor, causing panic redemption in the market. Fortunately, the USDC only recovered 1:1 anchor after the Federal Reserve intervened in the rescue.

Cao Huining, a professor of finance at the Changjiang Business School, published an article in June 2022, "Stablecoins are not stable: Lessons from the collapse of Luna and UST" believes that even stablecoins with fiat currencies lack transparency and may not actually have sufficient reserves. For example, USDT and USDC have not released a complete audit report so far. In addition, in his opinion, the price of stablecoins may not necessarily remain "stable", but is just a conventional title. Stable coins reserved by cryptocurrencies or supported by algorithms will be affected by cryptocurrency price fluctuations and are highly dependent on community operations, so the stability of the currency value is easily affected.

Xiao Feng believes that due to the lack of laws and regulations, stablecoin issuers are not clear about what rules should be followed to improve their transparency, but with the issuance of relevant laws on stablecoins in the United States, Hong Kong, China and other places, the issue of transparency will naturally be solved.

In response to social controversy, the US STABLE Act and the GENIUS Act define payment stablecoins as digital tokens anchored to fixed currency values, rather than algorithmic stablecoins that collapsed in 2022. In addition, reserves that support stablecoins must be separated from other company assets – a lesson learned from the mix of assets before the FTX crash.

It is also worth noting that Paul Krugman, the 2008 Nobel Prize winner in Economics, issued a statement on May 9 saying that cryptocurrencies are still criminal tools. In his opinion, the Democrats should not endorse the scam during the GENIUS Act's subsequent voting process, "but they'll probably do it."

The article points out that Trump's corruption clouds are shrouding the cryptocurrency field. "Trump Coin" and "Melania Coin" have become naked tools of bribery, and the same is true for the newly launched USD1 stablecoin by the Trump family's crypto company "World Free Finance". Cryptocurrencies are enabling the US president to clearly mark prices, and buyers include not only foreign wealthy people, but also foreign governments. The article quoted a survey as saying that a few large investors made great profits from the "Trump currency", but tens of thousands of small investors attracted by the president lost all their money after taking over the price at a high price.

In Paul Krugman's view, no matter how the final text of the bill is whitewashed, it is fueling corruption. Because the entire crypto industry is essentially corrupt, "money laundering and fraud are the whole meaning of its existence . "

As an important promoter of this round of US cryptocurrency legislation, Trump had firmly opposed cryptocurrencies during his first presidency and criticized his currency for being unstable, like "thin air".

But during the second presidential campaign, Trump found that cryptocurrency holders were an important force of voters, high-profile support for “innovation and Bitcoin”, claiming to make the United States a “global cryptocurrency capital” and announced that he would accept cryptocurrency donations to win votes from this group .

Whether legislation accelerates or affects the election, it shows that cryptocurrencies' influence on the United States is continuing to grow.

Research released by Coinbase , a US-listed company that provides digital currency exchange and wallet services, on July 11, 2024, showed that cryptocurrency voters have extremely strong willingness to vote, with almost nine out of every ten registered voters planning to cast a key vote in the November election, which is four times that of ordinary voters. On the other hand, one in six cryptocurrency holders are concentrated in seven key election states in the U.S., with Generation Z and Millennials accounting for 65% of the total registered voters who own cryptocurrencies, and about 40% of cryptocurrency holders reside in swing states where election results are susceptible to impact.

In recent years, the cryptocurrency industry has invested heavily in Washington through lobbying and PR marketing activities.

In previous elections, Wall Street and large companies have been the main sources of American political contributions. But in 2024, the cryptocurrency industry has also become an important new force. According to media statistics, the cryptocurrency industry raised more than $245 million in campaign funds during this election cycle, from corporate and individual donations.

According to a report by nonprofit regulator Public Citizen, cryptocurrency companies provide nearly half of all corporate investments, far more than any other industry, including oil companies and banks, which have traditionally contributed politically.

In the 2020 US election, Bankman Fried, who was still in glorious at the time, was one of the CEOs who donated the most to Biden, and his personal donation of $5.2 million, second only to Bloomberg founder Michael Bloomberg.