The US Senate passed the GENIUS Act - legislation that regulates the stablecoin

GENIUS Act Overview

The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is

• A landmark piece of legislation that regulates the stablecoin market in the United States.
• It is considered the most pro-crypto move by the US government in over a decade.

Key Provisions of the GENIUS Act

1. Issuers:
• Only licensed banks, fintech companies, or state-qualified issuers can issue stablecoins.
2. Reserve Requirements:
• Stablecoins must be backed 1:1 by cash, Treasury instruments, or Federal Reserve balances.
3. Audits and Redemption:
• Monthly audits are mandatory, and there are strict redemption rules to ensure transparency and trust.
4. Federal Licensing:
• Federal licensing pre-empts state Money Transmitter Licenses (MTLs), allowing for passporting across states.
5. Custodians:
• Custodians of stablecoins must be federally supervised trust banks.
6. Oversight:
• The US Treasury fully oversees foreign stablecoins, ensuring they meet the same standards as domestic issuers.

Implications for the Financial Landscape

• Market Legitimacy: The GENIUS Act is expected to bolster the legitimacy of stablecoins, encouraging more competition and innovation within the market.
• Investor Protection: The act aims to protect investors and maintain stability in the financial system by ensuring that stablecoins are fully backed and regularly audited.
• Global Competitiveness: This regulatory framework is designed to make the US more competitive in the global crypto market, potentially attracting more businesses and investments.
• Innovation and Risk Management: The act balances innovation with risk management, allowing smaller firms to operate under state supervision until they reach a specific size.

The GENIUS Act includes several provisions aimed at mitigating money laundering risks associated with stablecoins:

1. Bank Secrecy Act Compliance: Stablecoin issuers must comply with the Bank Secrecy Act, which mandates robust anti-money laundering (AML) measures.
2. Financial Crimes Enforcement Network (FinCEN) Rules: FinCEN is tasked with developing tailored AML rules specifically for stablecoin issuers. This includes facilitating novel methods to detect illicit activities involving digital assets.
3. Mandatory Audits: Monthly audits are required to ensure transparency and accountability.
4. Federal Oversight: The Treasury Department has sweeping authority to oversee stablecoin issuers, including foreign stablecoins.
5. Sanctions Compliance Programs: Issuers must certify that they have implemented AML and sanctions compliance programs.

These measures create a secure and transparent environment for stablecoin transactions, reducing the risk of money laundering and other illicit activities. However, as with any financial regulation, the effectiveness of these measures will depend on rigorous enforcement and ongoing vigilance.

References

• Stablecoin Legislation: An Overview of S. 1582, GENIUS Act of 2025 https://www.congress.gov/crs_external_products/IN/PDF/IN12553/IN12553.1.pdf
•  Senate passes landmark GENIUS Act stablecoin bill https://www.cnbc.com/2025/06/17/genius-stablecoin-bill-crypto.html
•  https://www.techrepublic.com/article/news-genuis-act-stablecoin-senate-regulation-2025/
• https://coinjournal.net/news/bitcoin-pepe-price-outlook-as-stablecoin-companies-gain-after-us-senate-passed-genius-act/
•  https://www.msn.com/en-us/money/companies/polymarket-gives-us-stablecoin-bill-89-chance-of-becoming-law/ar-AA1H3v0b
• https://www.cnbc.com/2025/06/13/what-the-genius-act-could-mean-for-crypto-and-other-investors.html
•  https://www.forbes.com/sites/chrisgroshong/2025/06/19/a-new-rulebook-for-stablecoinsthe-genius-act-explained/