The latest US stablecoin bill aims to distribute powers between state and federal governments
The latest version of the bill strengthens the role of states in regulating stablecoins and introduces new transparency and compliance requirements.
Sam Reynolds | Edited by Parikshit Mishra Updated Mar 11, 2025 8:48 AM UTC Published Mar 11, 2025 6:32 AM UTC
What you need to know:
- The latest GENIUS bill proposes to change the system of oversight of stablecoins, dividing powers between state and federal agencies and introducing new compliance and transparency requirements for issuers.
- States will now be able to control stablecoin issuers with a market cap of up to $10 billion, while larger issuers can remain under state control if certain conditions are met.
- The updated version of the bill requires stablecoin issuers to provide monthly liquidity reports, comply with freeze orders, and treats them like financial institutions for anti-money laundering purposes.
The latest draft of the Guidance and Creation of National Innovation for U.S. Stablecoins (GENIUS) Act, introduced at a hearing on Tuesday, proposes significant changes to the approach to oversight of stablecoins.
The draft proposes to split regulation of stablecoins between state and federal agencies, as well as introduce new compliance and transparency requirements for issuers.
The GENIUS Act is co-sponsored by Sens. Bill Hagerty (R-Tenn.), Tim Scott (R-S.C.), the chairwoman of the Senate Banking Committee, Kirsten Gillibrand (D-N.Y.), Cynthia Lummis (R-Wyo.), and Angela Alsobrooks (D-Md.). It was first introduced by Hagerty in February.
One of the most notable changes is the increase in the threshold for government regulation of stablecoins.
States are now allowed to oversee stablecoin issuers in cooperation with federal authorities if their market cap is up to $10 billion, giving them more power to regulate a significant portion of the stablecoin market.
The new version of the bill also includes an opt-out procedure that would allow large issuers to remain solely under state control if they meet certain criteria.
To obtain exemption from liability and maintain government oversight, stablecoin issuers must demonstrate sufficient capital, a good reputation, and be under the supervision of a so-called experienced government regulator.
The updated bill also introduces new transparency and disclosure requirements for issuers. Issuers will be required to submit monthly liquidity reports that will contain information on the composition of their reserves, including the total number of stablecoins issued.
Under the latest version of the bill, reserves must be held in U.S. dollars, demand deposits, Treasury bonds or other “approved assets.”
Stablecoin issuers will also be required to develop mechanisms to comply with freeze orders, and will also grant the Secretary of the Treasury the authority to block and prohibit transactions involving stablecoins issued by foreign individuals or entities.
While previous versions of the bill included provisions regarding enhanced customer identification (KYC) and anti-money laundering (AML) requirements, the updated version of the law explicitly defines stablecoin issuers as financial institutions.
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