18

June

2025

DLx News Alert: U.S. Senate Passes GENIUS Act Stablecoin Bill

Read this DLx News Alert as a PDF.

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Yesterday, the U.S. Senate passed the GENIUS Act (S.1582)[1] with significant bipartisan support, by a vote of 68 to 30. Before the bill can become law, it needs to be passed by the House of Representatives and signed by the President. Questions remain as to whether the House will pass the bill as is, pass a substantially modified or competing bill (like the STABLE Act), or combine the bill with a broader regulatory framework covering digital assets market infrastructure (such as the one being considered under the CLARITY Act bill). If the House assumes either of these latter two approaches, they risk delaying or faltering on a stablecoin framework that many in the industry and Congress see as critical.

In this News Alert, we (1) first offer some insight on likely next steps, and potential challenges, for the GENIUS Act, (2) provide an executive summary explaining the bill’s material provisions, (3) give an overview of the current stablecoin market in the U.S. and various participants, and (4) conclude with a summary of past legislative efforts and failed GENIUS Act amendments that could potentially come up again during committee markup and deliberation in the House.

1. Next Steps & Potential Remaining Challenges:

Unlike the GENIUS Act, the competing stablecoin bill in the House—the STABLE Act (also known as the “Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025”)[2]—would limit the availability of federal issuer charters to subsidiaries of nonbank entities, exclude uninsured national banks and foreign branches, prohibit tokenized reserve assets, and impose a two-year moratorium on algorithmic stablecoins.[3] The House is also currently considering the CLARITY Act (also known as the “Digital Asset Market Clarity Act of 2025”),[4] which would establish a comprehensive market regulatory framework covering all digital assets. The Senate had to engage in significant negotiation and compromise to get the GENIUS Act to a point where it could pass in the first place, so, if the House passes and returns to the Senate a substantially different or modified bill, it could very likely get stuck in the Senate for the remainder of the legislative session.

Nevertheless, with President Trump’s stated goal of signing stablecoin legislation by August,[5] Republicans in Congress will likely do what they can to ensure some version of the GENIUS Act (or STABLE Act) reaches Trump’s desk soon. Although barriers might be waiting ahead, the GENIUS Act’s bipartisan passage in the Senate represents a meaningful step forward in regulatory clarity for digital assets more broadly and in spite of a contentious divide on key political issues.[6] The bill passed over the blistering objections of many Democrats and at least two Republicans. Longtime cryptocurrency critic Elizabeth Warren (D-Mass.) was notable among the 28 dissenting Democratic Senators.

Assuming it does not get rolled together with the CLARITY Act in the first place, the GENIUS Act (also known as the ‘Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025’) could provide scaffolding for future comprehensive market legislation on digital assets. If ultimately the GENIUS Act is enacted as law, the United States would join other developed economies, like Japan and the EU, with established frameworks for the regulation of stablecoins.

2. Bill Summary & Key Concepts:

Here are some key highlights about the version of GENIUS Act the Senate passed this week:

  • General Purpose & Effect: The bill would provide for the implementation of a comprehensive framework permitting federal and state state banks, as well as nonbanks, to issue payment stablecoins, subject to additional oversight.
  • Types of Tokens Covered: The bill would regulate “permitted payment stablecoins,” exclusively, with all other types of digital assets excluded (potentially to be addressed in separate or subsequent legislation).
  • Securities Classification: The bill would clarify that stablecoins are not securities.
  • Tiered Regulatory Framework: In the content and form by which was passed in the Senate, the bill incorporates an amendment (S.A.2307)[7] introduced by the bill’s sponsor that the Senate adopted June 12, providing for a tiered regulatory framework based on a stablecoin’s market capitalization:
    • The U.S. Office of the Comptroller of the Currency (OCC) would serve as the primary federal supervisor for federally chartered stablecoin issuers, and qualified state banking or financial services regulators would oversee compliant state-licensed issuers.
    • Stablecoin issuers with a market capitalization of less than $10 billion would be able to opt for state-level licensing and oversight that meets federal standards, whereas federal banks and chartered “payment stablecoin issuers” with token market capitalized over $10 billion would be subjected to federal supervision under the OCC.
  • Peg to the Dollar: Under the bill, every stablecoin issuer, whether a bank or a non-bank, would be required to ensure stablecoins are pegged to the U.S. dollar, 1:1.
  • Collateralization: Stablecoin issuers would also be required to maintain tokens as fully collateralized and backed with at least 100% reserves in cash, U.S. Treasury bills, or other OCC-approved cash-equivalent instruments.
  • Segregation & Reporting Obligations: Issuers would also be required to hold reserves in segregated accounts, separate from the issuer’s operating assets, and to regularly report accountancy of reserve assets to their applicable supervisory body.
  • Prohibition on Yield: A permitted payment stablecoin issuer would be prohibited from offering yield or interest to token holders.
  • “Payment Stablecoin” Definition: The bill would define a “permitted payment stablecoin,” generally, as a digital asset used as a means of payment or settlement, the issuer of which redeems it for a fixed monetary value and is reasonably expected to maintain its stable value relative to the fixed value.

3. The Current Stablecoin Market:

Circle and Tether dominate the stablecoin market, and Circle, especially, will have a significant advantage over other issuers under the new GENIUS Act if enacted. Even then, the number of new entrants into the stablecoin sector in the U.S. has skyrocketed in recent months.

  • Circle & Tether: Circle’s USDC and Tether’s USDT are the two largest stablecoins by market share, with market capitalizations of $143.5 billion and $59.46 billion, respectively.[8] Circle’s reserves comport neatly with the GENIUS act’s requirement that all stablecoins be backed by an equivalent amount of U.S. dollars or short-term U.S. Treasury securities: their reserve is a mix of overnight repurchase agreements, Treasury bills, and cash.[9] Tether’s reserves consist of a more diverse array of assets, including not only treasuries and cash but also Bitcoin, secured loans, and other investments.[10] Although this reserve mix is likely responsible for Tether’s increased profitability relative to Circle,[11] Tether could potentially be required to divest itself of these assets to be compliant with the GENIUS’s Act’s reserve requirements.[12]
  • Smaller Issuers: Smaller firms issuing less popular stablecoins could potentially lose out if the GENIUS Act becomes law in its current form. The GENIUS Act would impose strict reserve minimums, reporting requirements, licensing, audits, and internal risk management procedures. All these measures entail costs and resources that could pose challenges for smaller issuers with less available capital or a more limited network of partners and service providers needed to support cross-border settlement.
  • Meta: Meta is rumored to be considering a revival of their abandoned attempts to issue Diem (formerly Libra), a stablecoin for their platform.[13] This bill could provide the regulatory certainty required to implement a stablecoin protocol for applications such as Facebook Marketplace. Meta would be prohibited from issuing a payment stablecoin without obtaining unanimous approval from federal regulators.[14]
  • Cross-Border Money Transmitters: Traditional cross-border money transmitters, such as Western Union, charge high fees for remissions and require time to process payments. The legal clarity and legitimacy the GENIUS Act would bring to stablecoins as a remittance solution could threaten their business models by providing a near-instantaneous transfer of funds for much lower fees. The money transmitters may also elect to go into stablecoin business themselves.
  • Donald Trump: World Liberty Financial, a private defi and crypto company controlled by Donald Trump’s sons, has a stablecoin called USD1, which is amongst the fastest growing stablecoins on the market with a market capitalization of $2 billion.[15] USD1 is notable for having been chosen as the vehicle by which the UAE-based firm MGX invested billions of dollars in Binance.[16] Warren, an outspoken critic of the GENIUS Act, has warned that should Congress pass the bill, Trump would be “the regulator of his own financial product.”[17]
  • Treasury Markets: The GENIUS Act requires all stablecoins to be backed by cash or “cash equivalents,” such as Treasury bills. This mandate rests on the assumption that U.S. government debt is highly liquid and can be readily converted to cash. In practice, however, that assumption has failed during periods of market stress. Demand for Treasuries has seized up during recent liquidity crunches- notably in March 2020[18] at the height of the COVID-19 pandemic, and in April 2025[19] when margin calls and dealer constraints triggered sharp selloffs and dislocated pricing across the Treasury market. If the U.S. government debt market began to spiral, stablecoin issuers would likely rush to sell Treasuries to meet redemptions and defend their pegs, which in turn would accelerate the selloff and deepen the crisis. Some commentators have in fact wondered whether the GENIUS Act’s reserve requirements are in fact “an effort to support domestic demand for federal debt at the very moment that foreign buyers appear to be stepping away.”[20] Stablecoins currently hold a small share of Treasuries, limiting their impact on the market. But as institutions adopt stablecoins more widely, large-scale selling during stress could amplify future crises.

4. Previous Legislative Attempts & Failed Amendments:

Several other stablecoin bills have been considered by the Senate, both in the current Congress and in Congresses past, though they never made it to a vote in the more senior chamber. The most promising among previous legislative attempts was in 2024 with the Lummis-Gillibrand Payment Stablecoin Act. Since May 1, when the GENIUS Act was first introduced in the Senate by Sen. Bill Hagerty (R-Tenn.), various Senators had proposed over 120 different amendments, all of which (except for S.A.2307), ultimately failed. Here are some of the more significant of the failed amendments:

  • The Durbin-Marshall Amendment: Introduced by Sen. Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kans.), this amendment (S.A.2345)[21] reflects draft legislation repeatedly introduced by Durbin and Marshall in previous Congressional sessions and in connection with other bills.[22] The amendment would have required the Federal Reserve to issue rules within one year banning card issuers and networks from limiting the number of payment networks merchants can use for credit card transactions in an attempt to break up the Visa-Mastercard duopoly, a flashpoint between the card networks and retailers for years.
  • The Card Rate Cap Amendment: Introduced by Sen. Bernie Sanders (D-Vt.) and Josh Hawley (R-Mo.), this amendment (S.A.2239)[23] would have capped credit card interest rates at 10% APR under the GENIUS Act. It would have allowed debtors who paid rates above that threshold to recover excess interest and authorizes civil enforcement actions against non-compliant creditors.
  • The Blumenthal Amendment: Introduced by Sen. Hawley and Sen Richard Blumenthal (D-Ct.), this amendment (S.A.2347)[24] would have banned social media companies from distributing their own stablecoins. During her speech opposing the bill, Sen. Warren praised the amendment, warning that any version of the GENIUS Act without it would serve as a vehicle for “Big Tech companies and other conglomerates to issue their own private currencies and take control over the money supply.”[25] Although this amendment failed, the Senate bill bars non-financial public companies from issuing a payment stablecoin without unanimous approval from a designated ‘Stablecoin Certification Review Committee.’[26]

Feel free to contact the DLx Law team with any questions you might have.

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[1] S. 1582, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/senate-bill/1582.

[2] H.R. 2392, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/2392/text.

[3] The STABLE Act bill in the House omits a catch-all for “similarly liquid” instruments that the GENIUS Act, as passed by the Senate, was expanded to include. The STABLE Act would also allow state-based issuers of any size to operate under a Treasury-approved regime, whereas the GENIUS Act would limit this path to issuers with under $10 billion market capitalization and requires approval from a 3-agency Stablecoin Certification Review Committee. It includes no restrictions on Big Tech or public company issuers. Taken together, the STABLE Act framework reflects a more restrictive approach.

[4] H.R. 3633, 119th Cong. (2025), https://www.congress.gov/bill/119th-congress/house-bill/3633.

[5] Ayesha Aziz, Trump Announces Plan for Stablecoin Law Before August, Signs Order for Bitcoin Reserve, Yahoo! Finance (Mar. 10, 2025), https://finance.yahoo.com/news/trump-announces-plan-stablecoin-law-080412738.html.

[6] The Senate’s endorsement of the GENIUS Act speaks to a broader legitimization of the digital assets business sector, something even the bill’s critics acknowledge. See Sen. Elizabeth Warren, Press Release, On Senate Floor, Warren Urges Colleagues to Vote No on the GENIUS Act, U.S. Senate Comm. on Banking, Hous. & Urban Affs. (May 19, 2025), https://www.banking.senate.gov/newsroom/minority/on-senate-floor-warren-urges-colleagues-to-vote-no-on-the-genius-act.

[7] S.Amdt. 2307 to S.1582, 119th Cong. (2025),  https://www.congress.gov/amendment/119th-congress/senate-amendment/2307/text.

[8] Rachel Christian, World’s 6 Largest Stablecoins: Top Cryptocurrencies That Maintain a Stable Price, Bankrate (Mar. 25, 2025), https://www.bankrate.com/investing/worlds-largest-stablecoins/.

[9] Circle vs. Tether: What’s in the Reserves?, Protos (May 19, 2025), https://protos.com/circle-vs-tether-reserve/.

[10] Id.

[11] Id.

[12] See Jesse Hamilton, Can Tether’s Dominance Survive the U.S. Stablecoin Bill?, CoinDesk (Jun. 17, 2025, 6:44 p.m.), https://www.coindesk.com/news-analysis/2025/06/17/can-tether-s-dominance-survive-the-u-s-stablecoin-bill.

[13] Leo Schwartz, Meta in Talks to Deploy Stablecoins Three Years After Giving Up on Diem, Fortune (May 8, 2025), https://fortune.com/crypto/2025/05/08/meta-stablecoins-exploration-usdc-circle-diem-libra/.

[14] Under the GENIUS Act, a U.S. public company not predominantly engaged in financial activities may issue a payment stablecoin only if it receives a unanimous waiver from the Stablecoin Certification Review Committee, composed of the Treasury Secretary, the Chair of the Federal Reserve Board (or the Vice Chair for Supervision), and the Chair of the FDIC. To obtain such a waiver, the company must demonstrate the stablecoin poses no systemic risk to the financial system or the deposit insurance fund. The company would be prohibited from using users’ transaction data for advertising, third-party sales, or non-affiliate sharing (except where legally required), and the company and its affiliates must comply with the Act’s anti-tying restrictions.

[15] Francisco Rodrigues, World Liberty’s Stablecoin Now Available on Multiple Networks Via Chainlink, CoinDesk (May 16, 2025, 5:32 PM), https://www.coindesk.com/markets/2025/05/16/world-liberty-s-stablecoin-now-available-on-multiple-networks-through-chainlink-s-interoperability-protocol.

[16] Federico Maccioni, Trump’s Stablecoin Chosen for $2 Billion Abu Dhabi Investment in Binance, Co-Founder Says, Reuters (May 1, 2025, 8:32 PM), https://www.reuters.com/world/middle-east/wlfs-zach-witkoff-usd1-selected-official-stablecoin-mgx-investment-binance-2025-05-01/.

[17] Supra note 6.

[18] See Gregory Phelan & Thomas Eisenbach, OFR Models One Theory on the Cause of March 2020’s Treasury Market Fragility, OFR Blog (Apr. 3, 2023), https://www.financialresearch.gov/the-ofr-blog/2023/04/03/ofr-models-one-theory-on-the-cause-of‑march‑2020s‑treasury‑market‑fragility/.

[19] Davide Barbuscia & Gertrude Chavez-Dreyfuss, Sharp U.S. Bond Selloff Revives Flashbacks of COVID‑Era ‘Dash‑for‑Cash’, Reuters (Apr. 9, 2025), https://www.reuters.com/markets/rates-bonds/global-markets-tariffs-treasuries-analysis-2025-04-09/.

[20] Robert Armstrong, Aiden Reiter and Hakyung Kim, SLR reform and the ‘doom loop’, Fin. Times (May 29, 2025), https://www.ft.com/content/20df1236‑4370‑4c7d‑b2ed‑09e95aa04f01.

[21] S.Amdt. 2345 to S. 1582, 119th Cong. (2025),  https://www.congress.gov/amendment/119th-congress/senate-amendment/2345/text.

[22] See  S. 4674, Credit Card Competition Act of 2022, 117th Cong. (2022), https://www.congress.gov/bill/117th-congress/senate-bill/4674/text; S. 1838, Credit Card Competition Act of 2023, 118th Cong. (2023), https://www.congress.gov/bill/118th-congress/senate-bill/1838/text.

[23] S. Amdt. 2239 to S. 1582, 119th Cong. (2025), https://www.congress.gov/amendment/119th-congress/senate-amendment/2239/text.

[24] S.Amdt. 2347 to S. 1582, 119th Cong. (2025), https://www.congress.gov/amendment/119th-congress/senate-amendment/2347/text.

[25] Elizabeth Warren, Floor Statement Urging Colleagues to Use Leverage and Vote No on GENIUS Act Until Critical Issues Addressed, U.S. S. Comm. on Banking, Hous., & Urban Affs. (June 6, 2025), https://www.banking.senate.gov/newsroom/minority/on-senate-floor-warren-urges-colleagues-to-use-their-leverage-and-vote-no-on-genius-act-until-critical-issues-addressed.

[26] See note 14.

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Amil Malik

Amil assists with various client matters in connection with digital assets and the adoption of blockchain technology, including general corporate law, securities law, and financial services regulation. She joined DLx Law after receiving her J.D. from the George Washington University School of Law, where much of her studies focused on national security and cybersecurity law.

Amil received her B.B.A./B.A. with high honors from the University of Texas at Austin. Between university and law school, Amil worked as a mergers and acquisitions analyst in New York, where she performed financial valuations and analysis as part of advisory services provided to sell-side and buy-side clients across media, consumer, technology, shipping, and financial technology industries. Amil is licensed to practice law in the District of Columbia.

Tom Momberg

+17186645458 tom.momberg@dlxlaw.com

Tom advises clients in an array of matters related to blockchain technology, decentralized finance, banking and payments systems, financial products, and financial technology applications. He joined DLx Law as an attorney after working as in-house counsel for a payments and banking software service provider, advising on various legal and regulatory matters, operations, risk, customer due diligence, and corporate best practices.

Tom received his J.D. from George Mason University Law School in Virginia and his B.A. from the University of Wisconsin-Milwaukee. Tom is a former journalist, and, while in law school, he interned for DLx Law and served as a law clerk for several federal institutions in Washington, D.C., including the CFTC, FCC, and House Judiciary Committee. Tom is admitted to practice law in the District of Columbia and the State of Oregon.

Sarah Chen

+19296345691 sarah.chen@dlxlaw.com

Sarah advises clients in all matters related to the adoption of blockchain technology, including general corporate, venture financing, securities laws and financial regulatory. Prior to joining DLx Law, Sarah was a senior associate in the M&A group of an international law firm headquartered in New York City, advising public companies and private equity firms on mergers, acquisitions, and other corporate transactions.

Sarah received her B.A. from New York University, magna cum laude, and her J.D. from Columbia Law School where she was a James Kent Scholar. During law school, Sarah also served as a judicial extern to the Hon. Debra Ann Livingston of the U.S. Court of Appeals for the Second Circuit. Sarah is licensed to practice law in the State of New York.

Gregory Strong

+3027665535 greg.strong@dlxlaw.com

Greg focuses on advising entities regarding legal issues associated with the adoption of blockchain technology. Prior to joining DLx Law, Greg was a Deputy Attorney General in the Delaware Department of Justice. He served as the Director of the Investor Protection Unit for three years and was responsible for administering and enforcing the provisions of the Delaware Securities Act. Prior to his appointment as Director of the Investor Protection Unit, Greg was the Director of the Consumer Protection Unit for three years.

Greg has successfully represented the State of Delaware in many complex civil enforcement matters alleging violations of Delaware investor and consumer protection statutes and has extensive litigation experience. Greg graduated from Lehigh University with a B.S. in Finance and received his J.D./M.B.A. from Temple University.

Angela Angelovska-Wilson

+12023651448 angela@dlxlaw.com

Angela is an early distributed ledger technology adopter and a leading authority in the evolving global legal and regulatory landscape surrounding distributed ledger technology and smart contracts. Prior to co-founding DLx Law, Angela served as the Chief Legal & Compliance Officer of Digital Asset and was part of the founding team.

Prior to joining Digital Asset, Angela was a partner at Reed Smith where she regularly advised clients on the implementation of new technologies to finance and the complex regulatory schemes involved in the development, creation, marketing, sale and servicing of various financial services and products. Before Reed Smith, Angela spent most of her career in various roles at Latham & Watkins, where she was recognized by The Legal 500 US among the top finance attorneys in the U.S.

Angela has a deep understanding of the Fin-Tech industry and in particular the distributed ledger industry, having been involved in a number of startups in various roles, as an employee, entrepreneur and advisor. In addition to DLx Law, Angela is also co-founder of Sila Inc., an innovative technology company.