The Senate’s passage (68 to 30, with strong bipartisan support) of the GENIUS Act marks a massive step forward towards clarity in U.S. federal stablecoin regulation. Now, all eyes turn to the House of Representatives, which has its own competing stablecoin bill, the STABLE Act, advanced by the House Financial Services Committee earlier this year. With President Trump’s stated August 2025 deadline for passage of stablecoin legislation looming, will the House adopt the GENIUS Act, advance the STABLE Act or make another move?
Stablecoins go mainstream
Stablecoins are having their moment, and market momentum suggests that we are still at the beginning. As demonstrated by Circle’s recent IPO and subsequent stock price surge, as well as recent announcements by both digital natives and traditional players – including large corporates and banks – of their stablecoin-related plans and goals, demand for stablecoins shows no signs of slowing down. Once arguably an outsider to the financial industry, stablecoins are becoming increasingly mainstream.
For years, many in Congress have been working hard to establish a clear and comprehensive U.S. federal framework for regulating payment stablecoins. As such, Senate passage of the GENIUS Act marks an important victory for the crypto space.
However, it remains to be seen whether, and in what form, the House may advance stablecoin legislation as important differences exist between the GENIUS Act and the STABLE Act. Both represent landmark legislation aimed at regulating the rapidly growing stablecoin market. In this post we focus on certain aspects of the GENIUS Act.
The GENIUS Act
A framework for payment stablecoins
Co-sponsored by a bipartisan group of lawmakers, including Senators Hagerty (R-TN), Scott (R-SC), Gillibrand (D-NY), Lummis (R-WY) and Alsobrooks (D-MD), the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act establishes a regulatory framework for payment stablecoins (i.e. digital assets that an issuer must redeem for a fixed value).
What is a Payment Stablecoin under the GENIUS Act?
PAYMENT STABLECOIN.—The term “payment stablecoin”—
(A) means a digital asset—
(i) that is, or is designed to be, used as a means of payment or settlement; and
(ii) the issuer of which—
(I) is obligated to convert, redeem, or repurchase for a fixed amount of monetary value, not including a digital asset denominated in a fixed amount of monetary value; and
(II) represents that such issuer will maintain, or create the reasonable expectation that it will maintain, a stable value relative to the value of a fixed amount of monetary value; and
(B) does not include a digital asset that—
(i) is a national currency;
(ii) is a deposit (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), including a deposit recorded using distributed ledger technology; or
(iii) is a security, as defined in section 2 of the Securities Act of 1933 (15 U.S.C. 77b), section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or section 2 of the Investment Company Act of 1940 (15 U.S.C. 80a–2), except that, for the avoidance of doubt, no bond, note, evidence of indebtedness, or investment contract that was issued by a permitted payment stablecoin issuer shall qualify as a security solely by virtue of its satisfying the conditions described in subparagraph (A), consistent with section 17 of this Act.
The GENIUS Act sets forth certain limitations on the ability of payment stablecoins to be issued to U.S. persons, including requirements for being a permitted stablecoin issuer.
- Subject to certain exceptions and safe harbors, a permitted issuer must be a federally-qualified nonbank payment stablecoin issuer, a state-qualified payment stablecoin issuer or a subsidiary of an insured depositary institution, and, in each case, such permitted issuers must be regulated by the applicable state or federal regulator.
- While such issuer may choose between state and federal regulation, state regulation is limited to issuers with stablecoin issuances of not greater than US$10 billion.
- The GENIUS Act also allows, subject to certain requirements, foreign (i.e., non-U.S.) issuers of stablecoins to offer, sell, or otherwise make available in the United States stablecoins using digital asset service providers, subject to determination by the U.S. Department of Treasury that such issuer is subject to comparable foreign regulations.
Importantly, the GENIUS Act requires permitted issuers to maintain reserves backing the stablecoin on a one-to-one basis using permitted reserves (e.g. U.S. currency or other similarly liquid assets).
In addition, permitted issuers (including foreign issuers) are restricted from paying interest or other forms of yield to holders of their permitted payment stablecoins. Algorithmic stablecoins and tokenized deposits are not within the definition of permitted payment stablecoins, and questions remains concerning whether assets on a private, permissioned blockchain would be in scope.
Under the GENIUS Act, permitted payment stablecoins are not characterized as securities under U.S. federal securities laws, which is consistent with certain recent public statements by U.S. SEC staff concerning certain stablecoins. Similarly, permitted payments stablecoin issuers are not investment companies. They are, however, subject to the Bank Secrecy Act for anti-money laundering and related purposes.
Permitted stablecoin issuers also must disclose publicly their redemption policies, as well as publish details of their reserves monthly.
The GENIUS Act also sets for expectations for: (1) providing safekeeping services for stablecoins; (2) supervision, examination, and enforcement authority with respect to federal-qualified issuers; and (3) reuse of reserves.
Looking ahead
The GENIUS Act heads now to the House of Representatives, where lawmakers will consider the Bill. The House, will have several options for proceeding. For example, the House could approve the GENIUS Act in the same form in which it was passed by the Senate or send it back to the Senate with proposed amendments. Alternatively, it is possible that the House could move forward with the STABLE Act mentioned above.
Given President Trump’s stated goal of achieving U.S. federal stablecoin legislation by August, lawmakers from both sides of the political aisle could try to ride the momentum generated by the Senate’s vote and approve the GENIUS Act without making any changes. Nevertheless, that outcome far from certain, and certain House lawmakers - and digital assets market stakeholders - may continue to hold strong views about the GENIUS Act vs. the STABLE Act.
In any case, should Congress successfully pass U.S. federal stablecoin legislation, the U.S. will join the growing list of jurisdictions with a comprehensive crypto framework, like the EU’s Market in Crypto Assets Regulation (MiCA), potentially making the U.S. a more attractive home for digital assets-related players, consistent with President Trump’s campaign trail promise to make the U.S. the crypto capital of the planet.
Next up, market structure: House’s CLARITY Act
The GENIUS Act reaches the House just as the Digital Asset Market Clarity (CLARITY) Act of 2025 makes its way to the full House floor for a vote after being advanced by two House committees.
The CLARITY Act aims to provide a comprehensive regulatory framework for digital asset markets, enhance consumer protection by improving transparency and accountability for market participants and resolve longstanding ambiguity in digital assets oversight, including by seeking to more clearly delineate the roles of the SEC and the U.S. Commodity Futures Trading Commission (CFTC).
We will be following developments in this space with interest. Please contact our team to learn more.
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