Understanding the GENIUS Act – The U.S. Crypto Bill Passed

On June 18, 2025, the U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a landmark piece of legislation that marks the first federal regulatory framework for stablecoins in the United States. With a bipartisan 68-30 vote, this bill is a significant win for the cryptocurrency industry, which invested heavily in the 2024 election cycle to support pro-crypto lawmakers.

The GENIUS Act, introduced by Senator Bill Hagerty (R-Tenn.) and co-sponsored by Senators Cynthia Lummis (R-Wyo.), Kirsten Gillibrand (D-N.Y.), and others, creates a federal regulatory framework for stablecoins. Stablecoins are cryptocurrencies pegged to stable assets like the U.S. dollar to maintain a consistent value. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins like USDT and USDC are designed for low-cost, instant transactions, making them ideal for payments, remittances, and trading.

The bill, passed on June 18, 2025, after overcoming procedural hurdles in May, establishes rules to protect consumers, promote innovation, and maintain U.S. dollar dominance in the global digital economy. It’s the first major crypto legislation to pass the Senate, signaling a shift toward a more crypto-friendly regulatory environment under the Trump administration.

Key Provisions of the GENIUS Act

The GENIUS Act focuses on regulating stablecoin issuers to ensure transparency, security, and consumer protection. Here are the main components:

1. Reserve Requirements: Stablecoin issuers must hold reserves of liquid, safe assets, such as U.S. Treasury bills, to back their tokens. This ensures that each stablecoin can be redeemed for its pegged value (e.g., $1 for a dollar-pegged stablecoin) even in cases of bankruptcy, prioritizing coin holders’ claims.

2. Regulatory Oversight:

   • Stablecoins with a market value exceeding $10 billion (“payment stablecoins”) are overseen by the Federal Reserve.

   • Nonbank issuers fall under the Office of the Comptroller of the Currency (OCC), ensuring consistent regulation across entities.

3. Anti-Money Laundering (AML) and Consumer Protections: Issuers must comply with AML and terrorism financing rules to prevent illicit activities. The bill also includes consumer safeguards to protect users from fraud and mismanagement.

4. Ethics Standards: The legislation extends ethics standards to special government employees and prohibits members of Congress or senior executive branch officials from issuing stablecoins during their tenure, addressing concerns about conflicts of interest.

5. Licensing Requirements: Stablecoin issuers must obtain licenses, ensuring only compliant entities can operate in the U.S. market. This aims to reduce risks from unregulated or undercapitalized issuers.

How the GENIUS Act Impacts the Crypto Industry

The passage of the GENIUS Act has far-reaching implications for various stakeholders:

For Investors

• Increased Confidence: Clear regulations reduce uncertainty, encouraging retail and institutional investors to engage with stablecoins. The 90% likelihood of an XRP ETF approval in 2025, as noted on Polymarket, suggests growing legitimacy for regulated crypto assets.

• Price Stability: With reserve requirements, stablecoins are less likely to “depeg” (lose their $1 value), protecting investors from losses seen in past incidents like TerraUSD’s collapse.

For Businesses

• Innovation and Competition: The bill opens the door for traditional financial firms and tech companies to issue stablecoins, fostering competition. For example, Shopify has integrated USDC payments via Coinbase, and Bank of America is exploring stablecoin issuance.

• Global Competitiveness: The U.S. risks falling behind jurisdictions like the EU, which implemented its Markets in Crypto-Assets (MiCA) framework in January 2025. The GENIUS Act helps the U.S. keep pace.

For the Crypto Market

• Legitimacy and Adoption: A federal framework enhances trust, potentially driving mainstream adoption of stablecoins for payments and trading.

• Market Growth: Analysts predict a 50-70% price increase for tokens like XRP, which could benefit from stablecoin infrastructure due to its use in Ripple’s On-Demand Liquidity service.

The Road to Passage

The GENIUS Act faced significant hurdles before its passage:

• Initial Opposition: In early May 2025, Senate Democrats blocked the bill, citing concerns over President Trump’s crypto ventures (e.g., World Liberty Financial) and potential conflicts of interest.

• Bipartisan Compromise: By mid-May, negotiators including Sens. Mark Warner (D-Va.), Kirsten Gillibrand (D-N.Y.), and Angela Alsobrooks (D-Md.) agreed on amendments addressing consumer protections and ethics standards, unlocking 18 Democratic votes.

• Final Vote: On June 18, 2025, the bill passed with a 68-30 vote, with only two Republicans (Sens. Rand Paul and Josh Hawley) voting against it. The bill now moves to the House for potential revisions.

This bipartisan support reflects the crypto industry’s growing influence, bolstered by $250 million in 2024 election spending to elect pro-crypto lawmakers.

The GENIUS Act is part of a broader push for crypto regulation in 2025:

• FIT21 Act: The Financial Innovation and Technology for the 21st Century Act, passed by the House in 2024, aims to clarify SEC and CFTC roles in regulating digital assets. A revised version is expected in 2025 but faces a tougher path due to its broader scope.

• H.J.Res.25: In March 2025, the House passed this resolution to repeal the Biden administration’s “DeFi Broker Rule,” which imposed burdensome reporting requirements on decentralized finance platforms.

• Bitcoin Reserve Proposal: Sen. Cynthia Lummis has proposed a bitcoin reserve to address national debt, though its funding model remains controversial.

• No Retail CBDC: The Trump administration and Republican lawmakers have rejected a U.S. central bank digital currency (CBDC), unlike Europe’s digital euro pilot.

The GENIUS Act’s passage signals that stablecoin regulation is a priority, but broader crypto legislation like FIT21 may face delays due to complexity and competing legislative priorities.

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What Could Have Been Better?

While the GENIUS Act is a step forward, it has limitations:

1. Narrow Scope: The bill focuses solely on stablecoins, leaving other cryptocurrencies (e.g., Bitcoin, Ethereum) in regulatory limbo. A comprehensive framework like FIT21 could provide clearer rules for the entire crypto market.

2. Conflict-of-Interest Concerns: Critics, including Sen. Elizabeth Warren, argue that the bill doesn’t fully address potential conflicts, such as President Trump’s crypto ventures. Stronger provisions to prevent insider benefits could enhance trust.

3. Consumer Protection Gaps: While the bill includes AML and reserve requirements, some Democrats wanted stronger protections against fraud and market manipulation, which could be critical if stablecoin adoption surges.

4. Implementation Challenges: Oversight by the Federal Reserve and OCC may strain resources, and nonbank issuers could face high compliance costs, potentially stifling smaller innovators.

5. House Reconciliation: The House’s STABLE Act differs from the GENIUS Act, and reconciling the two could delay final enactment. A unified bill from the start might have streamlined the process.

In my view, the bill could have included clearer guidelines on integrating stablecoins with decentralized finance (DeFi) platforms, as DeFi’s growth is closely tied to stablecoin liquidity. Addressing this could prevent future regulatory patchwork.

The Future of Crypto Regulation

The GENIUS Act is a milestone, but it’s just the beginning. With the 2026 midterm elections looming, 2025 is a critical window for passing additional crypto legislation before political priorities shift. The crypto industry’s influence, backed by pro-crypto lawmakers like Sens. Hagerty and Lummis, suggests more progress is possible, but challenges like regulatory clarity for non-stablecoin assets and potential Democratic opposition remain.

The bill’s passage also positions the U.S. to compete globally, especially as the EU’s MiCA framework gains traction. Stablecoins could strengthen the U.S. dollar’s dominance in digital finance, but only if implementation is smooth and inclusive.

FAQs

What is the GENIUS Act?
The GENIUS Act is a U.S. Senate bill passed on June 18, 2025, creating a federal regulatory framework for stablecoins, with rules on reserves, oversight, and consumer protections.

How does the GENIUS Act affect stablecoin users?
It ensures stablecoins are backed by safe assets, regulated by the Federal Reserve or OCC, and compliant with AML rules, making them safer for payments and trading.

What are the risks of the GENIUS Act?
The bill’s narrow focus on stablecoins leaves other crypto assets unregulated, and House reconciliation could delay final enactment. Conflict-of-interest concerns also persist.

Could this impact XRP’s price?
Yes, a regulated stablecoin market could boost related tokens like XRP, used in Ripple’s payment systems, with predictions suggesting a rise to $5 by 2025.

What’s next for U.S. crypto regulation?
Broader legislation like FIT21 may follow, but 2025 is critical before the 2026 elections. The House will review the GENIUS Act for potential changes.