Senate Passes “GENIUS Act” to Regulate USD-Pegged Stablecoins
Alex Morgan
June 17, 2025
“By mandating full-reserve backing and monthly disclosures, the GENIUS Act brings much-needed certainty to the stablecoin ecosystem.”
Overview
On June 17, 2025, the U.S. Senate passed the “Guaranteeing Enhanced National Stability and Uniformity in Stablecoins Act” (GENIUS Act) by a 68–30 vote, marking the first federal framework for U.S.-dollar-pegged stablecoins. The legislation sets reserve requirements, disclosure standards, and oversight mechanisms for issuers, aiming to strengthen trust in digital money.
The GENIUS Act requires that all stablecoin liabilities be fully backed by liquid assets such as cash and short-term Treasury bills, and mandates monthly attestation reports by independent auditors.
Key Provisions
Full-Reserve Requirement: Issuers must hold 100% of tokens in high-quality liquid assets.
Monthly Disclosures: Public attestation of reserve levels, ensuring transparency.
Federal Oversight: Treasury and SEC share enforcement authority, with penalties for non-compliance.
The bill also clarifies that algorithmic stablecoins are subject to the same backing rules, effectively curtailing uncollateralized designs.
Market Reaction
Upon passage, USDC and USDT saw trading volume jump 15% on major exchanges. Coinbase reported a 25% increase in stablecoin deposits, while DeFi platforms experienced lower funding spreads as counterparty risk eased.
Crypto equities also rallied: Circle (USDC issuer) stock rose 4.2% in after-hours trading, and Paxos gained 3.8%, reflecting investor confidence in regulated stablecoins.
Expert Analysis
“This is the watershed moment stablecoins have awaited,” says Jamie Smith, Head of Policy at Chainalysis. “Regulatory clarity will unlock institutional capital into DeFi.”
Meanwhile, Richard Vernon, CEO of Paxos, notes that “the GENIUS Act levels the playing field, but issuers must move quickly to implement robust auditing practices.”
Outlook
The bill now moves to the House, where passage is expected in early July. Enactment would likely take effect in Q1 2026. Market observers anticipate a wave of new product launches and greater institutional participation once stablecoins are federally regulated.
In the interim, issuers are scrambling to align reserves and engage auditors, making the coming months critical for compliance and market stability.