What does the GENIUS Act “resurrected from the dead” mean for the crypto industry?

Author: Patti, ChainCatcher

Edited by: TB , ChainCatcher

With a failure less than two weeks ago, the U.S. Senate's GENIUS Act unexpectedly passed a key procedural vote on Monday night (May 20), marking the regaining of political momentum of the stablecoin legislation and is expected to be officially passed in the next few days.

This time, the "motion to proceed" passed, which means that the bill is allowed to enter the next stage of the review process. Although it does not mean the final legislation is passed, it lays a key foundation for subsequent votes. According to the Senate procedure, if the bill is to be officially passed, it is necessary to first obtain more than 60 votes of the "cloture vote" and then complete the vote with a simple majority.

From failure to "resurrection"

Just on May 9, the bill was rejected at 48:49 in the same procedural vote, and its failure was mainly attributed to strong internal concerns within the Democratic Party about potential conflicts of interest in the Trump family in the cryptosphere. But in just one week, the Senate reached a compromise and proposed an amended bill, and finally received more than 60 votes in the vote on May 20, successfully crossing the procedural threshold.

The key to this round of voting reversal is the loosening of the Democratic Party and the continued pressure from industry organizations.

After the first motion was rejected, crypto giants such as Coinbase and Circle acted quickly. Coinbase CEO Brian Armstrong publicly expressed his support for the bill for the first time and mobilized platform users to contact members of Congress through its political action organization "Stand With Crypto" to promote the retrial of the bill.

The organization has raised more than $300 million in political donations for the 2026 midterm elections and has scored every member of parliament on the app. Coinbase also made it clear that if the stablecoin bill cannot be advanced, "we cannot advance more comprehensive market structure legislation."

Meanwhile, the bill’s two co-sponsors, Gillibrand and Lummis, successfully fought for several Democratic lawmakers to change their attitudes, and Gillibrand even "reversed" himself in two rounds of votes.

GENIUS Act timeline:

• March 2025 : The Senate Banking Committee passes the draft bill by 18:6;
• May 9 : The motion failed (48:49), and the bill was once deadlocked;
• May 15 : The two parties reach a compromise and introduce a revised bill;
• May 19 : The Senate votes again (the results are not disclosed);
• May 20 : The motion is passed and the bill enters the next stage;
• Early June (expected): The final vote of the Senate ( if passed successfully, the bill will be sent to the House of Representatives for consideration);
• July to August (expected): House Committee Review + House of Representatives Full Debate ( the bill will undergo preliminary review in the House and enter the debate process);
• September to October (expected): The House of Representatives' final vote ( if the House passes the version consistent with the Senate, it will enter the presidential signing process; if there are differences, it will need to enter the coordination process between the two houses);
• November (expected): The two chambers of versions are coordinated and adopted a unified text;
• December (optimistic expectations): The president signs and the bill takes effect.

Interpretation of key contents of the new version of the draft

According to the new version of the GENIUS Act, it has made adjustments and clarifications on a number of key provisions, including:

Core content of the regulatory framework

• Limited Issuance Qualifications : Only "qualified issuers" can issue payment stablecoins in the United States, including compliant subsidiaries of regulated banks, or non-bank financial institutions that have been approved by federally and meet prudent standards.
  Corresponding clauses : SEC. 3(a), SEC. 5, SEC. 4(a)(7)

• Mandatory 1:1 high-quality reserves : All stablecoins must be fully supported by US dollar cash, Fed account funds, short-term US bonds and other high-quality assets. The issuer must disclose the reserves every month and accept third-party audits.
  Corresponding clauses : SEC. 4(a)(1)(A–C), (3)

• Dual regulatory mechanism : Stable coins with a total issuance of no more than US$10 billion can be subject to state-level supervision. Once it is exceeded, it must be transferred to the federal regulatory system to ensure that the scale and regulatory intensity dynamically match.
  Corresponding clauses : SEC. 4(c), SEC. 6(a)(1), SEC. 7(d)

• Client asset isolation and bankruptcy protection : It is prohibited to mix customer funds, reserve assets shall not be re-pled, and it is clear that the holder of stablecoin has a statutory priority repayment right in the case of bankruptcy of the issuer.
  Corresponding clauses : SEC. 4(a)(2), SEC. 4(a)(7)(B), SEC. 11

• Misleading publicity ban : Stablecoins are not allowed to use words such as "FDIC insurance" and "US government guarantee" in brands or marketing to prevent the public from mistakenly thinking that they are official currency.
  Corresponding clauses : SEC. 4(e)(1–3), (9)

• Prohibited income stablecoins : Regardless of whether the issuing entity is a foreign institution, stablecoin products with interest or income shall not be provided to prevent the disguised circulation of financial instruments.
  Corresponding clauses : SEC. 2(23)(B), SEC. 4(a)(7)

• Anti-money laundering and national security compliance requirements : Stablecoin issuers must comply with the Bank Secrecy Act, establish KYC, AML, sanctions compliance and risk assessment mechanisms, and FinCEN is authorized to supervise related behaviors.
  Corresponding clauses : SEC. 4(a)(5), SEC. 8, SEC. 13

• High violation penalties : A subject who is not authorized to issue stablecoins without authorization may be fined up to US$100,000 per day. If it constitutes subjective intention, further criminal liability may be pursued.
  Corresponding clause : SEC. 7(b)(5)(AC)

New terms and highlights:

**Stablecoin regulation takes shape: limited issuance + mandatory

reserve + dual supervision:**

The new amended bill defines a clear regulatory logic: who is eligible for issuance, how to issue it in compliance, and who is responsible for supervision.

First, only Permitted Issuers can issue payment stablecoins in the United States. The "qualification" here not only includes compliant subsidiaries of regulated banks, but also expands to some approved non-bank financial institutions. Through such qualification restrictions, the risk replication of "unlicensed, high leverage, low transparency" issuance model like Tether will be blocked in the United States.

Secondly, it is the strengthening of the reserve mechanism. The draft clearly requires all stablecoins to achieve 1:1 high-quality asset support, limited to US dollar cash, Fed accounts, short-term Treasury bonds, etc., and must be audited by certified public accountants and disclose reserve details monthly.

The third is the introduction of a dual federal-state regulatory mechanism: those with a total issuance volume of less than US$10 billion can be subject to state supervision, and after it exceeds it, it must be subject to federal supervision.

" Ethical Governance" and "Data Check and Balance"

Another major highlight of this round of revisions is the federal government’s restrictions on the “identity” and “motivation” of issuing entities:

The draft introduced the "moral border" clause for the first time, prohibiting senior federal executive officials (such as the Treasury Secretary, the SEC chairman, etc.) from directly or indirectly participating in stablecoin issuance, and including specific "special government employees" (such as White House adviser David Sacks) on the restricted list. However, the president and vice president have been exempted from the ban, especially in the context of the current situation where many tech friends within the Trump administration are deeply involved in the shaping of Web3 policies. This move will undoubtedly become an ammunition for political enemies to attack.

For large-scale technology platforms, this draft also sets a new threshold.

Out of vigilance against the "platform is the country", all technology companies that do not focus on finance must accept approval from the "Stable Coin Certification Review Committee" if they want to issue stablecoins and are prohibited from using the user data they have in place to conduct financial business. This means that if Meta, Apple, and Google have stablecoin plans, they must first solve the problems of "data sovereignty" and "abuse of financial functions".

Overseas stablecoins encounter "geographical restrictions" again

Another controversial new clause in the draft is a compliance screening mechanism for overseas stablecoin issuers. The Ministry of Finance is authorized to put forward three requirements for non-American distribution entities such as Tether:

1. Can technically cooperate with US law enforcement;

2. Whether the country is a "compliant country";

3. Whether there is enough asset support.

This not only makes the US Treasury Department the de facto "distribution gatekeeper" of international stablecoins, but also leaves enough diplomatic and geopolitical space for it. Once diplomatic relations with a certain country deteriorate, the mechanism can even be used as a tool for financial pressure, and the outside world has expressed obvious concerns about its politicized risks.

FDIC is absent, and the bottoming mechanism is still blank

Although regulators have increased transparency and prudent management requirements, the bill does not include payment stablecoins in the federal deposit insurance (FDIC) system, but only requires issuers to submit appraisal reports on bankruptcy disposal and asset isolation within three years. This also means that once a large-scale run or a burst of related financial institutions occurs, stablecoin users will still find it difficult to obtain institutional guarantees of the "lender of last resort".

What does it mean for the crypto industry?

Unleashing the potential of hundreds of billions of funds

If the GENIUS Act is finally passed, it will lay a federal regulatory foundation for the legal issuance of stablecoins in the United States, marking the first time that one of the most important infrastructures in the crypto industry is included in the mainstream financial regulatory framework.

Currently, the market value of stablecoins has reached about US$250 billion, which is the core infrastructure supporting the liquidity of the crypto market, payment network and even cross-border clearing. The compliance of stablecoins may leverage hundreds of billions of dollars of new funds into the market, pushing more traditional financial institutions including Wall Street banks and payment giants to accelerate entry.

Market structure legislation becomes the next battlefield

Although the regulation of stablecoin has made major breakthroughs, the overall institutional construction of the crypto industry is still in its early stages, especially on market structure issues such as exchange supervision, token issuance and scope of application of the Securities Law, and the legislation gap remains to be filled.

Coinbase CEO Brian Armstrong recently said on the same stage with two stablecoin legislation promoters, Senators Gillibrand and Lummis: "Stablecoins are just the first step, and what we need more is complete market structure legislation."

The reason why this issue is more sensitive is because it involves the core dispute of "whether tokens belong to securities."

At present, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have not reached a clear division of labor in terms of regulatory authority. During Biden's administration, the SEC has repeatedly sued crypto platforms on the grounds of "illegal securities issuance"; but after Trump's camp came to power, it quickly announced that it would "revoke all relevant lawsuits" and promised not to pursue the matter again, which caused concerns from the outside world about changes in regulatory direction.

The Trump family is deeply involved, exacerbating the risk of legislative politicization

During the advancement of the GENIUS Act, it is difficult to ignore the political game behind it. In recent years, the Trump family has made a high degree of layout in the crypto field, covering multiple sectors such as Bitcoin mining, NFT, meme coin, stablecoins and ETFs. Because of this, some Democratic lawmakers are on the wait-and-see or even hostile to the overall promotion of encryption legislation, and are worried about giving the "green light" to Trump's capital.

However, with the latest amendment to the "moral border" clause in the bill, the president and vice president were exempted from the ban. In the context of the current context of many technology friends within the Trump administration's deep participation in the shaping of Web3 policies, this move will undoubtedly become an ammunition for political enemies to attack.

**Lawyer 's view: Clear regulation will usher in a new stage in the

development of stablecoin**

To this end, ChainCatcher interviewed professional lawyers in the industry to analyze the actual impact of the GENIUS Act on the industry.

Guo Yatao, a lawyer focusing on the fields of Web3 and crypto, said that once the GENIUS Act is implemented, it will bring long-lost regulatory clarity to the key infrastructure of stablecoins. "Stablecoins are the blood of the crypto market. Everyone used it before, but the supervision was vague and the mind was always hanging. Now the framework is clear, and core questions such as reserve mechanisms, asset isolation, and issuance qualifications have answers, which is an important boost to market confidence."

He pointed out that the significance of the bill is not only to "give legal persons rules to follow", but also to open up channels for participation for traditional financial institutions. "In the past, it was not that they didn't want to do it, they had no idea how to start. Now the compliance path is clear, and banks, payment giants, etc. are expected to enter the market in large quantities, which brings not only funds, but also credit and infrastructure."

However, Lawyer Guo also reminded that the legislation of stablecoin is only the first step, "More complex issues are still to come, such as gray areas such as exchange supervision and token characterization. Stablecoin is the first to legislation, which shows that the two parties are beginning to find consensus on basic issues, but there is still a long way to establish a complete regulatory system."

Mao Jiehao, a senior lawyer at Shanghai Mankun Law Firm, also believes that the promotion of the GENIUS Act is a signal of the increasing formation of the Web3 regulatory system. “Mainstream countries promote a compliant stablecoin framework, which will help clarify the boundaries and behavioral norms of all parties, and will also accelerate the integration of Web2 and Web3.”

He further pointed out that the implementation of compliant stablecoins may trigger a wave of minting fiat coins into compliant stablecoins in the short term, and will also stimulate the emergence of more application scenario projects, especially in tracks such as DeFi and RWA (reality asset tokenization).

"For stablecoin issuers, the key to future competition lies in who can provide more attractive usage scenarios. They hope that users can exchange fiat currency for their stablecoins, and behind it is necessary to support real and stable interest-generating assets. RWA is a natural direction of fit." Lawyer Mao added, "Whether more landing scenarios can be opened up" will become the key to the struggle between stablecoin issuers, and this application-driven competition will accelerate the maturity and differentiation of the stablecoin market.

Regulatory boots landed, the next step is still unknown

Indeed, the GENIUS Act provides a predictable framework for stablecoin compliance. However, what really determines whether the crypto industry can enter the mainstream financial system is not just the legal identity of payment stablecoins, but whether the entire market structure can build a clear, unified and stable regulatory framework.

Therefore, although the possibility of the bill being passed in the House of Representatives has increased significantly, the final passage still needs to go through multiple political hurdles such as coordination between the two houses and the signing of the president. According to industry insiders, the most optimistic expected final passage of the bill will also be until the end of 2025.

In addition, whether the United States can complete legislation on core mechanisms such as exchanges, token issuance, and cross-border capital flows in the future will determine whether the "second wave of compliance" in the crypto industry can arrive.