The Senate on May 19 voted to advance a bill that would establish regulations for the cryptocurrency industry, several days after an initial vote failed because of Democratic opposition.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act is a bill that seeks to impose regulations on “stablecoins,” which are digital tokens whose value is pegged to another secure asset (e.g., U.S. Treasury bonds and other securities). Stablecoins are considered safer investments than other cryptocurrencies, such as Bitcoin, and are thus attractive to larger institutional investors such as pension funds, sovereign wealth funds, and wealthy family offices.
The bill would require stablecoins to be issued by licensed companies, prevent “rehypothecation” of stablecoins, and establish the boundaries between state and federal regulations, among others.
The GENIUS Act initially had bipartisan backing in the Senate. However, before the first cloture vote on May 8, several Democratic senators withdrew their support, ostensibly because it lacked sufficient security provisions. Two Republicans, Sens. Josh Hawley (R-Mo.) and Rand Paul (R-Ky.) also opposed the bill on ideological grounds. As a result, that motion failed by a vote of 49 nays to 48 yeas, well below the 60-vote-threshold required to invoke “cloture” and limit debate to hasten final passage.
Industry groups have demanded the act’s passage in order to bring stability to the stablecoin market, which they believe will encourage more investors to purchase stablecoins. Following the cloture motion’s failure, the bill was amended to meet the demands of dissenting Democrats. As a result, in a second vote on May 19, cloture was invoked by a vote of 66 yeas to 32 nays, with Hawley and Sen. Mark Kelly (D-Ariz.) not voting.
“The GENIUS Act skyrockets the United States with a digital payment framework with the fastest rails possible. It will ensure U.S. dollar dominance. Customers will be protected, the demand for U.S. treasuries will balloon to the tune of more than $1 trillion, and innovation in the digital asset space will thrive in the United States going forward,” Sen. Bill Hagerty (R-Tenn.), the bill’s principal sponsor, wrote on social media after the vote.
Compared with the earlier version, the amended bill includes provisions that impose requirements on foreign stablecoin issuers. There are limits to how the bill may be amended after cloture.
Some Democrats have opposed the bill because of President Donald Trump’s personal stake in the stablecoin market. The president and his family own a stablecoin issuer: World Liberty Financial, run by Donald Trump Jr. and Eric Trump, which issues the stablecoin “USD1.” Should the bill pass and investments in stablecoins increase, President Trump may realize significant financial gains.
“The GENIUS Act exempts President Trump from the ethics laws on stablecoin,” Sen. Chris Murphy (D-Conn.) wrote on social media after the vote.
“Some of the Democrats who voted to advance the bill tonight want this changed before the final vote. So there is still time to fix this – if we speak up,” Murphy wrote.
On January 23, Trump signed the Executive Order on Strengthening American Leadership in Digital Financial Technology, establishing the Working Group on Digital Asset Markets, then named Silicon Valley entrepreneur David Sacks his “AI and Crypto Czar.” Sacks congratulated the Senate for passing the act on social media platform X, calling it “groundbreaking, bipartisan legislation.”
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