The US Senate has taken a significant step to regulate the stablecoin market. The GENIUS Act approved in the Banking Committee foresees that stablecoin issuers will be subject to federal oversight. If the bill passes both chambers of Congress, comprehensive regulations for the crypto market will come into effect. The Banking Committee of the US Senate approved the bill aiming to regulate stablecoin issuers at the federal level with a vote of 18 to 6. Named the GENIUS Act, this bill will now move to the Senate floor, and a similar process will need to take place in the House of Representatives. After the different bills in both houses are merged and then pass a general vote, the stablecoin regulations will become law and be sent for approval to President Donald Trump.

Efforts to regulate the stablecoin market have long been a topic of discussion in the US Congress, and the bill passing through the Banking Committee signifies a significant milestone in the regulations of the cryptocurrency sector. With Republicans gaining a majority in both chambers of Congress in the 2024 elections, the speedy advancement of the stablecoin law has become a priority on the agenda.

CRITICISM FROM DEMOCRATS
While Democratic senators largely supported the stablecoin regulation bill, all the proposed changes for additional regulatory controls were rejected through partisan votes. Senior Democratic committee member Elizabeth Warren critiqued the bill, stating that certain provisions posed a serious threat to national security. Warren expressed increasing disappointment with each of her proposals being turned down. Warren pointed out during the discussions that it would be foolish to advance the bill at a time when news emerged about Trump-connected financial institution World Liberty Financial discussing with the cryptocurrency exchange Binance about creating its own stablecoin.

Democratic Senator Catherine Cortez Masto criticized Republicans for not participating in the sessions where changes to the bill were being discussed, calling for more regulatory oversight measures in the legislation. Committee Chairman Republican Senator Tim Scott highlighted the complexity of the process by saying, “We worked day and night, weekends to achieve this.”

WHAT DOES THE GENIUS ACT BRING?
The GENIUS Act, prepared by Senator Bill Hagerty from Tennessee and known as the “Guidance and Economic Vitality for US Stablecoins Act,” aims to regulate stablecoin issuers at the federal level. The bill includes provisions for consumer protection, promoting market competition, and supporting innovation. Democrats Kirsten Gillibrand from New York and Angela Alsobrooks from Maryland also co-sponsored the bill with a group of Republican senators, showing bipartisan efforts. Hagerty stated that the bill aims to provide the clarity and stability needed by the country and innovators.

There are still obstacles to overcome for stablecoin regulations to become law in the US. A similar bill needs to progress in the House of Representatives, and it is expected that the different versions from both chambers will be combined to create a joint regulation. However, considering the increasing support for regulatory efforts in the cryptocurrency sector in Congress, the possibility of the stablecoin bill becoming law seems stronger than ever.