GENIUS Act Updated: Stablecoin Regulation in the US

Senators Bill Hagerty, Tim Scott, Cynthia Lummis, and Kirsten Gillibrand have unveiled an updated version of the GENIUS Act, a bipartisan bill focused on stablecoin regulation in the US. The revised legislation, initially introduced in February, incorporates feedback from industry stakeholders to refine the regulatory landscape for stablecoins.

Key Updates to the GENIUS Act

Senator Hagerty highlighted the transformative potential of stablecoins, emphasizing their role in improving transaction efficiency and potentially boosting demand for US Treasuries. He stated, "My legislation establishes a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto."

Expanded Reciprocity for Overseas Stablecoins

A significant change is the expansion of "Reciprocity for Payment Stablecoins Issued in Overseas Jurisdictions." The updated bill introduces specific requirements for overseas stablecoins, mandating the Treasury Secretary to establish reciprocal agreements with countries possessing comparable regulatory frameworks. These agreements will cover key areas such as:

• Reserve requirements
• Supervision
• Anti-money laundering (AML) compliance
• Sanctions compliance
• Liquidity standards

The goal is to foster better international transactions and interoperability with US dollar-denominated stablecoins. The bill sets a two-year deadline for finalizing these agreements.

Expanded Definition of "Comptroller-Regulated Entity"

The updated Act broadens the definition of a "Comptroller-regulated entity" to encompass both federally qualified nonbank payment stablecoin issuers and any entity authorized by the Comptroller.

New Rules for Issuers: Transaction Blocking and Legal Orders

The bill introduces new regulations concerning transaction blocking and adherence to legal orders. Stablecoin issuers will be required to collaborate with the Treasury Secretary before blocking transactions involving foreign persons' assets. However, the Secretary won't be obligated to notify issuers before taking action. Issuers must also possess the technological capabilities to freeze, seize, or halt stablecoin transfers as legally mandated. Importantly, the Act prohibits the offering or trading of foreign stablecoins within the US unless they satisfy the bill's stipulations.

Senator Gillibrand noted, "The updated version of the GENIUS ACT makes significant improvements to a number of important provisions, including consumer protections, authorized stablecoin issuers, risk mitigation, state pathways, insolvency, transparency, and more."

Senate Banking Committee Hearing

The reintroduction of the GENIUS Act coincides with a broader push for cryptocurrency regulation in the US. A Senate Banking Committee hearing is scheduled to review the bill on March 13, 2025, at 10:00 a.m. ET.

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