Senate to vote on GENIUS Act, setting stablecoin rules with strict oversight, transparency, and limits on foreign tokens to boost USD dominance.
A bipartisan measure intended to establish federal regulations for stablecoins, the GENIUS Act, is currently preparing for another critical vote in the United States Senate. Following a procedural motion submitted by Senate Majority Leader John Thune, this vote could occur as soon as Wednesday, June 11. The measure is considered a significant advancement in regulating dollar-pegged digital currencies in the United States.
This week, there will be a new cloture vote on the GENIUS Act.
Senator John Thune submitted a cloture motion on Monday, which expedited the GENIUS Act’s passage to a final vote. The cloture motion is a device that restricts debate and necessitates a final decision.
This motion initiates a 30-hour debate period that enables senators to discuss every aspect of the bill comprehensively. The Senate intends to conduct final votes on both the bill and fundamental amendments as early as midweek, provided that no objections are raised.
Senators are still required to ratify certain amendments to the legislation. Nevertheless, the Senate leadership persists in its efforts to expedite the measure’s passage. The GENIUS Act aims to establish regulatory guidelines for the use of stablecoins, protect consumers, and ensure financial stability, all while legalizing them.
Amendment #2307 is the critical component of the GENIUS Act
The current round of negotiations is underpinned by a substantial portion of the bill, specifically Amendment #2307, which modifies specific sections of the original proposal. This amendment aimed to integrate the disparate interests of the digital asset community and the banking industry.
One of the modifications that introduces a new system of supervision is Amendment #23707. Stablecoin issuers with less than $10 billion of market capitalization may select for state-level regulations. Federal supervision would encompass the larger issuers.
The amendment also mandates that stablecoins maintain the transparency of their balance sheets by providing monthly attestations and public disclosures that US dollars or liquid assets, such as Treasury bills, fully back stablecoins.
The Debate Regarding Interest-Yielding Stablecoins and Foreign Tokens
One of the more contentious provisions of the GENIUS Act is its prohibition of interest-yielding stablecoins. Traditional banks have consistently expressed their apprehensions regarding these digital tokens, which provide their users with incentives or interest.
The bill aims to prevent these stablecoins from being traded on the same markets as traditional bank deposits. This decision has been influenced by the banking industry’s vigorous lobbying efforts.
Additionally, the GENIUS Act establishes specific restrictions on foreign stablecoins. In order to be permitted in the US market, these tokens must adhere to the same regulatory standards as stablecoins issued within the country, as stipulated by law. This provision reflects a desire to ensure that the US financial system is not at risk from foreign digital assets and national security concerns.
Subsequent Actions for the Stablecoin Bill
The Senate will vote on the final version of the GENIUS Act following the cloture vote. The bill will be forwarded to the House of Representatives for further review if it is enacted. Legislators in that region have been developing a distinct but comparable legislation, the STABLE Act, which is also intended to regulate stablecoins.
Before a final version of the GENIUS Act and the STABLE Act is submitted to President Donald Trump for approval, they must be reconciled. The process is anticipated to require significant time as lawmakers endeavor to reconcile the two measures regarding critical issues, including the extent to which federal or state oversight would prevail.
The GENIUS Act is expected to be passed this week, as senators are optimistic, particularly due to its broad bipartisan support. However, the final stage is contingent upon the willingness to reconcile amendments and other issues with the final text.
