Yesterday the US Senate Banking Committee passed the GENIUS Act to regulate payment stablecoins by a vote of 18 to 6. This was despite the defeat of dozens of Democrat proposed amendments by votes of 13 to 11 during the markup session. It was not as one-sided as appears, given suggestions were already included in the draft legislation in different forms. One issue not previously reported is that the latest iteration of the Bill excludes stablecoins that provide interest or yield.
The goal is to have a Bill for President Trump’s signature by the end of April. There are several steps still needed, including a full Senate vote and integration with the House STABLE Act Bill. However, given the number of Democrat Committee votes in favor of the Senate Bill, the outlook looks optimistic.
At the start of the markup session a bipartisan package of amendments was approved. While the details were mentioned rather briefly (see later), one of these amendments covered ‘integrity’ assessments of stablecoin issuers. This overlapped with several more specific Democrat proposals aiming to ensure that issuers had not participated in sanction breaches or enabled drug traffickers or child pornographers, amongst others. Hence, these proposals were rejected.
A few other amendments were rejected because the topics would be covered in the separate crypto market infrastructure bill. For example, this includes the ability or inability for offshore issued stablecoins to be used in the United States. Given this relates to secondary markets, it was considered an infrastructure issue outside the scope of the current stablecoin bills. On a related topic, the bill includes a clause covering reciprocity of stablecoin issuance with other jurisdictions.
Senator Warren made several proposals. She was flabbergasted by news reports that the Trump family had discussions about working with Binance (which was fined $4.3 billion), including the potential issuance of a stablecoin.
Bipartisan stablecoin discussions
The Democrat proposals came after significant prior bipartisan discussions. Some Democrat proposals were withdrawn because Bill sponsor Senator Hagerty had already agreed to take them into consideration. This included an amendment from Senator Kim who wants to ensure that stablecoin issuers don’t facilitate drug cartels. Senator Hagerty said they are working together on an amendment:
“to ensure that issuers annually certify that they’re not enabling such activity subject to civil and criminal penalties. So I also commit to working with Senator Kim to establish a comprehensive anti-money laundering and elicit finance framework that would be applicable to the entities beyond the issuer in the digital assets ecosystem in future pieces of legislation that would include but not be limited to a forthcoming market infrastructure bill”.
Democrat Senator Alsobrooks has been added as the second Democrat co-sponsor of the bill, joining Senator Gillibrand who is not on the Banking Committee. At the start of the proceedings Senator Hagerty said he was working with Senator Alsobrooks on the technical application of consumer protections.
We published a separate article outlining the specific changes in the GENIUS Act.
