GENIUS Act Clears Senate: Stablecoin Market Faces Sweeping Regulation and $3.7T Opportunity

Historic Crypto Legislation Redefines U.S. Digital Asset Oversight

The U.S. Senate has passed the GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins Act—marking the country’s first comprehensive legislation targeting the stablecoin sector. With a decisive 68–30 bipartisan vote on June 17, the bill lays the groundwork for federal oversight of payment stablecoins pegged 1:1 to the U.S. dollar, backed exclusively by cash or Treasuries. As it advances to the House of Representatives, the Act has already triggered widespread market reactions, political debate, and structural shifts across the digital asset landscape.

Introduced in February 2025 by Senator Bill Hagerty, the GENIUS Act is the most significant attempt yet to bring federal clarity to stablecoin regulation in the United States. Rather than a blanket approach to crypto assets, the bill zeroes in on payment stablecoins—specifically those pegged 1:1 with the U.S. dollar and backed by either cash or Treasuries.

Key regulatory components outlined in the legislation:

• Covers Dollar-Pegged Payment Stablecoins Only
  Applies solely to stablecoins that maintain a 1:1 peg to the U.S. dollar and are fully backed by high-quality liquid assets such as cash or U.S. Treasuries.
• Treats Issuers Like Banks Under the BSA
  Stablecoin issuers will be treated as financial institutions under the Bank Secrecy Act (BSA), aligning them with the same rules traditional banks follow.
• Mandatory Compliance with AML and KYC Regulations
  Issuers must implement strict anti-money laundering protocols, including Know Your Customer (KYC) procedures, sanctions screening, and the filing of Suspicious Activity Reports (SARs).
• Freeze or Burn Capability on Demand
  All issuers must maintain technical capacity to freeze or destroy wallet balances if requested by law enforcement, a controversial move aimed at boosting national security compliance.
• Global Reach for Domestic Security
  The law isn’t limited to U.S. companies—it also applies to foreign stablecoin issuers operating in U.S. markets, ensuring offshore platforms can't sidestep regulation.
• Transparency Through Monthly Disclosures
  Issuers must provide public monthly reports detailing reserve holdings, ensuring users and regulators have ongoing insight into backing assets.
• Annual Independent Audits Required
  All major stablecoin issuers will be subject to annual third-party audits to verify compliance and reserve adequacy.
• Enforcement Mechanism via Treasury Designations
  The Treasury Department gains authority to designate non-compliant foreign issuers, triggering a mandatory delisting process across U.S.-based platforms.

Strong bipartisan backing, including support from Senators Cynthia Lummis, Tim Scott, Kirsten Gillibrand, and Angela Alsobrooks, signals a shift in Washington's posture toward crypto regulation. However, the Act hasn’t escaped partisan controversy. Democratic critics, led by Sen. Elizabeth Warren, argue the bill could enrich former President Donald Trump, who reportedly earned $57 million from crypto ventures in 2024, including stablecoin USD1. 

Warren warned the Act could “turbocharge Trump’s corruption,” while Trump himself celebrated the passage on Truth Social, calling on the House to “fast-track” the “incredible bill.” Treasury Secretary Scott Bessent projected the stablecoin market could grow to $3.7 trillion by 2030, citing benefits such as lower borrowing costs and increased demand for U.S. Treasuries.

The legislation sparked immediate reactions across the crypto industry. Coinbase CEO Brian Armstrong hailed it as a “big milestone,” while Circle CEO Jeremy Allaire called it a historic moment for the U.S. economy. Ripple CEO Brad Garlinghouse emphasized the credibility boost for Ripple’s RLUSD and its potential to enhance XRP’s cross-border use. Tether’s Paolo Ardoino responded with a succinct “GENIUS,” reflecting bullish sentiment among major issuers.

Markets responded swiftly. Circle’s stock soared 34% following the bill’s approval, although it dipped 1.3% the next day, closing at $149 after peaking at $165. Coinbase shares jumped 16%, while Visa and Mastercard each dropped roughly 5%, signaling investor concern over disruption to traditional payment networks. ARK Invest offloaded 642,766 Circle shares over two days—14% of its total stake—valued at $96.5 million, split across ARKK, ARKW, and ARKF ETFs. The move came despite favorable legislation, highlighting market volatility around regulatory developments.

The House now holds the next phase of the GENIUS Act’s journey. Lawmakers must navigate reconciliation with the STABLE Act—its counterpart introduced in the House—which proposes distributing regulatory power across the Federal Reserve, OCC, and state regulators. By contrast, GENIUS centralizes oversight within the Treasury and limits state authority to issuers with a coin market cap under $10 billion. Debate is expected around amendments such as barring presidents from profiting off crypto, a direct response to Trump’s prior earnings.

As Washington’s posture toward digital assets sharpens, the GENIUS Act has cemented itself as a defining moment for crypto price index evolution and regulatory clarity. While it remains to be seen how the House will shape the final version, the Act’s passage has already reshaped the regulatory horizon for stablecoins, leaving both legacy institutions and digital finance innovators recalibrating their next moves.

This article has been refined and enhanced by ChatGPT.