Senate Advances Stablecoin Bill
May 20, 2025
The U.S. Senate invoked cloture on the GENIUS Act yesterday, a bipartisan bill designed to establish a regulatory framework for payment stablecoins. The bill and cryptocurrency legislation are major priorities for House and Senate financial services leadership.
Why it matters: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, often a currency like the U.S. dollar, euro, or a commodity like gold. Common examples include USDT (Tether) and USDC (USD Coin), both of which are tied to the value of the U.S. dollar.
- Stablecoins can offer price stability compared to traditional cryptocurrencies, which tend to be more volatile. Advocates for stablecoin regulation see the effort as an important step to digitize the dollar, ensuring it remains competitive in global trade, finance, and as a store of value in a world increasingly embracing digital assets.
- Proponents of the legislation say the GENIUS Act could bolster the U.S. dollar's position in the digital economy. It would do so by providing clarity and stability to the rapidly growing stablecoin market, which has seen its market capitalization surge to $246 billion.
- The legislation is also expected to influence the broader regulatory landscape for digital assets in the United States; however, a separate effort known as market structure on crypto legislation is expected.
Go deeper: If enacted, the bill would enact the following measures:
- Stablecoin issuers must be licensed: Entities that wish to issue payment stablecoins would need to obtain a license from a federal or state regulator.
- 1:1 Reserve Requirement: All stablecoins must be backed by reserve assets at a one-to-one ratio, ensuring that each token is backed by U.S. dollars or high-quality liquid assets. It is important to note that secure and liquid assets such as cash or Treasury bills can be held as reserves.
- Redemption Rights: Consumers must be able to redeem their stablecoins for U.S. dollars at par value, preserving trust and liquidity.
- Audit and Transparency: Issuers would be subject to regular audits, public disclosure of reserve composition, and strict risk management protocols.
- Anti-Money Laundering (AML) Compliance: Issuers must comply with AML, Know Your Customer (KYC), and other financial integrity obligations.
- Prohibits Issuance by Non-Financial Entities: Large technology companies and commercial firms would be barred from issuing stablecoins to prevent systemic risk or monopolistic digital currencies.
What they’re saying: The Senate voted to invoke cloture—a 60-vote threshold—with a large bipartisan margin (66-32) on Monday. This is a stark change from two weeks ago, when the bill failed to receive sufficient votes to be considered by the full Senate.
- Despite initial bipartisan support, Democrats had concerns over potential conflicts of interest involving President Donald Trump's family's cryptocurrency business ventures and the possibility of Big Tech companies issuing their own stablecoins.
- Other Democrats on the committee have changed their perspective on the proposed legislation, touting “major victories” in stablecoin negotiations since the initial bill failed two weeks ago. A revised draft has been introduced, including stronger anti-money laundering, national security, and consumer protection provisions.
- Senator Mark Warner (D-VA), a key negotiator for the Democrats, was quoted as saying he was “hoping for a deal,” noting that there are “literally just a couple of language issues” to iron out. Warner and 15 other Democrats voted for the bill.
The bottom line: The cloture vote was the key legislative hurdle for the bill, and Senate passage is likely assured later this week. The legislation still needs to go through House consideration before making it to the president’s desk. Proponents believe the bill would be a milestone for an industry that wants to encourage broader use and acceptance of cryptocurrency.
What's next: CREFC will continue to monitor this proposed legislation and any impact it may have on the CRE finance market.
Please contact James Montfort (Jmontfort@crefc.org) with any questions.