GENIUS Act Update Strengthens Stablecoin Regulation in the US

• Expanding global cooperation for stablecoins.
• Increased compliance measures for issuers.
• Clear regulatory framework for stablecoin issuers.

Senator Bill Hagerty, along with Senators Tim Scott, Cynthia Lummis and Kirsten Gillibrand, announced a revised version of the GENIUS Act, which aims to strengthen the regulatory framework for stablecoins in the United States. Originally proposed in February, the bipartisan legislation now includes additional provisions to address global concerns and improve oversight while maintaining a focus on fostering innovation. The revised bill incorporates feedback from industry leaders and policymakers, introducing measures that could significantly impact both domestic and international stablecoin markets.

One of the most significant changes is the expansion of regulations for stablecoins issued abroad. The new version of the bill requires the Treasury Secretary to establish agreements with other countries that have similar regulatory standards. These agreements will define clear requirements for reserve management, oversight, anti-money laundering protocols, and sanctions compliance. The goal is to improve the global stability of stablecoins and ensure smooth cross-border transactions. The initiative also aims to protect U.S. interests by bringing stablecoins issued abroad into line with U.S. regulations. The bill sets a strict two-year deadline for finalizing these international agreements.

The legislation also expands the definition of “comptroller-regulated entities,” which now includes federally approved non-bank stablecoin issuers and other authorized financial institutions. This adjustment gives regulators greater control over entities authorized to issue stablecoins, ensuring that they comply with the necessary legal and financial standards. The goal is to create a structured environment where only compliant organizations can participate in the growing stablecoin sector, thereby strengthening investor confidence and market stability.

Another important aspect of the revised GENIUS Act is the inclusion of strict compliance measures for stablecoin issuers. Under the new rules, issuers must have the ability to comply with legal orders requiring the blocking, freezing, or seizure of stablecoin assets. This means that if authorities require action against a specific account or transaction, stablecoin issuers must have the technology and processes in place to execute those legal directives. Additionally, foreign stablecoin issuers will not be allowed to operate in the U.S. unless they meet all of the requirements outlined in the bill.

Senator Hagerty highlighted that stablecoins can play a crucial role in strengthening financial efficiency and increasing demand for U.S. Treasuries. He stated that this bill strikes a balance between regulatory clarity and market innovation, reinforcing the U.S. as a leader in the global crypto industry. Senator Gillibrand echoed this sentiment, noting that the updates address key areas such as consumer protections, risk management, transparency, and regulatory oversight.