In a May-3-2025 statement, a group of US Senate Democrats emphasized the need for comprehensive regulations on stablecoins, citing growing concerns over consumer protection and financial stability. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, introduced in February 2025, aims to establish clear rules for stablecoin issuers and provide regulatory clarity.
“We recognize that the absence of regulation leaves consumers unprotected and vulnerable to predatory practices,” said Senator Ruben Gallego and colleagues in a statement on 3 May 2025. However, they expressed concerns that the current version of the bill still has numerous issues that need to be addressed.
Apparently, the Democrats do not want a regulatory regime that relaxes requirements to a level that may compromise national accountability, transparency, national security, and other vital concerns.
Key Concerns and Provisions
Despite recent changes to the bill aimed at addressing Democratic concerns, Republican lawmakers had initially hoped for a strong bipartisan vote on the floor. The revisions, intended to win over Democratic support, introduced new language addressing several key areas of concern. However, as the debate continues, it remains to be seen whether these efforts will be enough to secure widespread bipartisan backing.
The senators highlighted several areas that require improvement, including:
- Anti-Money Laundering: Strengthening provisions to prevent illicit activities and ensure compliance with US regulations
- Foreign Issuers: Clarifying regulations for foreign companies issuing stablecoins in the US market
- National Security: Addressing potential national security risks associated with stablecoins
- Financial System Safety: Preserving the stability and soundness of the financial system
- Accountability: Ensuring that stablecoin issuers meet regulatory requirements and are held accountable for non-compliance
If the concerned Democrat senators insist on having the proposed improvements identified above made to the GENIUS Act, it may stall or delay the passage of the bill into law.
Impact on Stablecoin Adoption
The GENIUS Act has garnered significant attention, with many industry players advocating for clear regulations to promote stablecoin adoption. If passed, the Act could help the US achieve the following outcomes:
- Legitimize Stablecoins: Establish stablecoins as trusted financial tools, encouraging adoption by banks, institutions, and major companies
- Boost Public Trust: Dispel myths around stablecoins and increase public confidence in their safety and reliability
- Drive Innovation: Provide regulatory clarity, enabling companies to innovate and develop new use cases for stablecoins
Read also: Stablecoins are not securities in the United States– U.S SEC
Fed’s Crypto Policy Under Fire
Meanwhile, a leading industry expert has criticized the US Federal Reserve for maintaining a policy that favors big-bank-issued stablecoins.
Caitlin Long, founder and CEO of Custodia Bank, pointed out that the Fed’s stance blocks banks from engaging directly with crypto assets and prohibits them from issuing stablecoins on permissionless blockchains. Long urged Congress to expedite the passage of a federal stablecoin bill, which could override the Fed’s policy and provide much-needed clarity.
What Next?
The GENIUS Act has cleared the Senate Banking Committee with a strong bipartisan 18-6 vote and is now moving to the full Senate for debate and a final vote. While the bill’s prospects are promising, the Democrat senators’ statement highlights the need for further refinement to address concerns and ensure effective regulation. As the bill progresses, industry stakeholders are watching closely, hoping for a regulatory framework that promotes innovation while protecting consumers and maintaining financial stability. Will the US Senate be able to help maximize the opportunities in stablecoin innovation while minimizing the risks associated with stablecoin adoption? Time will tell.
Read also: Mastercard partners with Binance, Circle, Kraken, OKX, MetaMasks and Others for Stablecoin Adoption
Discover more from Crypto Asset Buyer
Subscribe to get the latest posts sent to your email.
