On Tuesday, the U.S. Senate passed S. 1582 (GENIUS Act) with bipartisan support (68–30), creating the first comprehensive federal framework for stablecoin regulation. This landmark legislation establishes clear regulatory pathways for a new form of digital payments while imposing significant compliance requirements that will reshape the competitive landscape for stablecoin startups. The legislation now advances to the House of Representatives, as White House staff have signaled support for advancing the bill to signature before August recess.
Stablecoins are blockchain-based tokens designed to be redeemable for a fixed amount of value. The GENIUS Act only addresses “payment stablecoins,” which are tokens designed for payments or settlement that are backed by traditional fiat reserves and government securities. Out of scope from the bill’s regulatory framework are algorithmic stablecoins, endogenously collateralized stablecoins, and non-payment focused stablecoins.
The GENIUS Act establishes three permitted stablecoin issuer types: subsidiaries of insured depository institutions (IDIs), federal-qualified nonbank issuers (regulated by the OCC), and state-qualified issuers. The framework introduces a crucial $10 billion outstanding issuance threshold—nonbank issuers above this limit must submit to federal oversight, while smaller players can operate under state regulation if the state frameworks are "substantially similar" to federal standards. Many state laws will not meet this standard without legislative action. For IDI issuers and federal-qualified nonbank issuers, the bill would require federal regulators to act on an application within a 120-day window. There is a 12-month safe harbor for subsidiaries of IDIs and federal-qualified issuers with applications pending on the law’s effective date.
The legislation includes a significant restriction targeting Big Tech: public companies not predominantly engaged in financial activities cannot issue stablecoins without unanimous approval from a three-member committee comprised of the Secretary of the Treasury, the Chair of the Federal Reserve Board, and the Chair of the Federal Deposit Insurance Corporation. These companies must also comply with strict data-use limitations that prohibit using transaction data for advertising or selling it to third parties.
The bill would require that issuers maintain 100% backing with segregated funds and would prohibit commingling of stablecoin reserves with the issuer’s operational funds. Eligible backing assets include U.S. dollars, short-term Treasuries (≤93 days maturity), overnight reverse repos, and specified money market funds. The legislation explicitly prohibits yield-bearing stablecoins, limiting revenue models but ensuring stability. Issuers will also need to comply with anti-money laundering rules and ethics requirements.
With passage by the Senate, the GENIUS Act now moves to the House of Representatives, where the Financial Services Committee has already advanced its own stablecoin legislation (the STABLE Act). The two bills are conceptually close in their approach to a regulatory framework, with some differences around the edges regarding foreign stablecoin issuers, the requirements to transition from state to federal oversight, and phase-in timelines. The Senate bill’s framework becomes operative no later than 18 months after enactment (and potentially sooner, once final rules are in place), while the House bill has a 12-month effective date but a two-year phase-in for sales prohibitions. The key difference expected to see the most attention in the coming weeks is that the House bill does not currently include the GENIUS Act’s restriction on issuance by nonfinancial public companies.
Although the GENIUS Act is not law, there is a clear bipartisan coalition supporting the basic regulatory framework it presents. For companies considering stablecoin ventures, the legislation provides clear pathways but demands early strategic decisions about federal versus state regulatory approaches, significant compliance investments, and business model adaptations. Companies should begin assessing their regulatory pathway preferences now, as the House-Senate reconciliation process and eventual implementation appear to have significant political tailwinds.