US Senate Passes GENIUS Act for Stablecoin Regulation, Raising Compliance for Crypto Markets

The US Congress, led by the Senate’s 68-30 bipartisan approval of the GENIUS Act, has introduced the first major federal regulation targeting US dollar stablecoins. The bill requires all stablecoins serving US users to be fully backed by liquid reserves such as US dollars or Treasury bills and to provide mandatory monthly disclosure of reserves. Only entities licensed by US regulators can issue stablecoins, while federal officials are prohibited from launching government-backed digital tokens. The law enhances consumer protection, regulatory clarity, and supports US dollar dominance in digital assets. Amendments were added to strengthen oversight against suspicious activities and improve customer safeguards at banks. Tether (USDT) faces the most significant compliance challenges due to its offshore status, risking access to US markets unless adapted. Circle (USDC), already compliant with US regulations, is poised to benefit and expand its market share, particularly in corporate finance. The GENIUS Act may spur similar regulatory moves globally, especially in Asia, potentially reducing Tether’s dominance and boosting local currency stablecoins. The bill now heads to the House, with potential passage and presidential signature before August. For crypto traders, this act marks a pivotal step towards lower market risk, increased institutional involvement, and a shift in stablecoin market structure, though House revisions may still occur.