The GENIUS Act: Regulatory Framework for Stablecoins
On May 20, 2025, the Senate cleared procedural obstacles to consider the GENIUS Act on the Senate floor. Originally introduced on Feb. 4, by Senator Bill Hagerty, R-TN, along with Senate Banking Committee Chairman Tim Scott, R-SC, Kirsten Gillibrand, D-NY, and Cynthia Lummis, R-WY, the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (GENIUS) Act would define and regulate payment stablecoins.[1] Payment stablecoins are digital assets designed to maintain a stable value relative to another asset. More than 99% of stablecoins tie their value to the U.S. dollar.
What are stablecoins?
At a high level, cryptocurrencies generally do not have a fixed price and their value can fluctuate, making them difficult to use for payments and corporate treasury functions. Stablecoins are a subset of cryptocurrencies designed to maintain a fixed, predictable price by tying their value to another asset. These reference assets may include commodities like gold, fiat currency like the U.S. dollar or Swiss franc, or other financial instruments or baskets of assets.
What would the GENIUS Act do?
- Define a payment stablecoin as a digital asset used for payment or settlement that is pegged to a fixed monetary value, but is not a national currency.
- Establish payment stablecoin issuer licensing procedures including Bank Secrecy Act compliance obligations.
- Implement issuer reserve and certification requirements, redemption obligations and regulatory standards.
- Permit foreign payment stablecoins to be offered and sold without being licensed under the act so long as the issuer has the technological ability to comply with any lawful order.
- Apply existing regulatory framework at the Federal Reserve for depository institutions and Office of the Comptroller of the Currency for nonbanks to issuers of more than $10 billion of stablecoins.
- Requires nonfinancial public companies to seek and obtain approval before issuing a proprietary stablecoin.
- Prohibit a government official from issuing a stablecoin while in office.
- Allow states to regulate issuers with under $10 billion in market capitalization and provides a waiver process for issuers exceeding the threshold to remain state regulated.
Strategic Bitcoin Reserve
On March 6, 2025, President Trump signed an executive order (EO) to establish a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile.
The EO would:
- Create a Strategic Bitcoin Reserve, made up of bitcoins held by the Department of Treasury that have been forfeited as part of criminal or civil proceedings.
- Stand up a U.S. Digital Asset Stockpile, consisting of digital assets other than Bitcoin held by the Department of Treasury that have been forfeited in criminal or civil proceedings.
- Authorize the Secretaries of Commerce and Treasury to review additional ways to build the stockpile, as long as it is budget neutral.
- The order does not identify specific digital assets for inclusion beyond Bitcoin, but President Trump posted on social media that it may include Ether, XRP, Solana and Cardano.
Subsequently, on March 11, Sen. Cynthia Lummis, R-WY, reintroduced the BITCOIN Act. This legislation directs the government to purchase 1 million Bitcoin over five years. Instead of forfeited Bitcoin, purchases would be financed by remittances from the Federal Reserve banks. The legislation does not address digital assets beyond Bitcoin.
[1] The GENIUS Act of 2025 was voted out of Committee on March 13, 2025, with all Republican members and five Democrats voting in support.
