The U.S. "GENIUS Act": Dramatic Turn in Stablecoin Regulation and Future Challenges

From May to June 2025, the U.S. Senate engaged in a political and financial epic battle over the "Guidance and Establishment of the U.S. Stablecoin National Innovation Act" (, referred to as the "GENIUS Act" ). This bill aims to establish the first federal regulatory framework for the $250 billion stablecoin market and has experienced a thrilling turnaround from "procedural death" to "bipartisan compromise," ultimately advancing to the Senate floor debate stage with a voting result of 68 to 30. However, behind this victory lies months of interest exchanges between both parties, lobbying struggles among industry giants, and ethical disputes triggered by the political family's "crypto gold mine."

Legislative Process: A Dramatic Turn from Near Death to Resurrection

Timeline Review:

• March 2025: Republican Senator Bill Hagerty officially introduced the draft bill, aiming to establish a "federal + state" dual regulatory system for payment stablecoins.
• May 8: The bill unexpectedly failed in its first procedural vote with a score of 48:49, as the Democrats collectively turned against it citing "conflicts of interest involving a certain political family."
• May 15: The two parties held emergency consultations and introduced a revised bill, removing clauses targeting the crypto business of a certain political family in exchange for some support from the Democrats.
• May 20: The amendment passed with a key "motion to terminate debate" by 66 to 32, clearing the legislative hurdle.
• June 11: The Senate passed the bill by an overwhelming margin of 68 to 30, moving into final debate and amendment procedures.

The core of this series of twists lies in the Republican Party's clever packaging of the bill as a strategic tool for "digital dollar hegemony," while the Democratic Party shows signs of softening its stance due to concerns that "regulatory vacuum leads to financial risks." Senate Majority Leader John Thune's rhetoric is highly provocative: "If the U.S. does not take the lead on stablecoin rules, China will fill the gap with the digital yuan!"

Key Terms: Regulatory Blueprint and "Devil in the Details"

The regulatory framework design of the "GENIUS Act" attempts to walk a tightrope between "encouraging innovation" and "preventing risks," with its core provisions summarized in the following six pillars:

1. Dual regulation and issuance threshold: Stablecoins with an issuance scale exceeding 10 billion USD are led by the federal regulator, the Office of the Comptroller of the Currency (OCC), (. Those below 10 billion USD can choose state-level regulation, but state standards must align with federal ones. This design not only reassures states' autonomy but also delineates red lines for giants, seen as a veiled protection for certain large stablecoins.

2. 1:1 Reserves and Asset Isolation: It is mandatory for stablecoins to be fully backed by cash, short-term U.S. Treasury bonds, and other highly liquid assets, and the reserve assets must be strictly isolated from operational funds. This clause directly addresses the 2022 Terra collapse incident, but allows for the inclusion of "risk assets" such as money market funds in the reserves, which has been criticized as "laying a mine."

3. Tech giants "tightening the reins": Non-financial tech companies issuing stablecoins must be approved by the newly established "Stablecoin Certification Review Committee" )SCRC(, and must meet data privacy and antitrust requirements. This clause is interpreted as a "targeted strike" against the stablecoin plans of certain tech companies.

4. Consumer Protection and Bankruptcy Priority: In the event of the issuer's bankruptcy, stablecoin holders have priority in redeeming assets, and the reserves are not included in the bankruptcy estate. However, Democrats point out that this provision is weaker than traditional bank FDIC insurance mechanisms and poses a "frozen funds" risk.

5. Anti-money laundering and transparency: Include stablecoin issuers under the jurisdiction of the Bank Secrecy Act, mandating compliance with KYC, suspicious transaction reporting, and other obligations. However, the loophole is that decentralized exchange )DEX( is unregulated, leaving a backdoor for illegal fund flows.

6. Political Family "Exemption Loophole": The bill does not explicitly prohibit family members of Congress members or the president from participating in stablecoin business, allowing a stablecoin issued by a company under a certain political family to be compliant with a market value of $2 billion ). Democratic Senator Warren angrily criticized: "This is giving a green light to 'crypto corruption' for some people!"

Controversy Vortex: The "Crypto Gold Mine" of Political Families and Bipartisan Rift

The biggest resistance to the advancement of the bill does not come from policy details, but from the deep involvement of a certain political family in the conflicts of interest in the cryptocurrency industry. Three major points of contention have pushed the political game to a climax:

1. The "legal arbitrage" of a certain stablecoin: A stablecoin issued by a company related to a certain political family has injected $2 billion into a trading platform through an overseas investment company. The family could earn over $80 million annually from trading fees. More critically, once the bill is passed, the stablecoin will automatically gain federal recognition, and its market value may soar to the tens of billions level.

2. The Moral Crisis of "Pay-to-Meet": A certain political family is accused by the Democrats of "securitizing national power" by offering holders the qualification for a "special dinner" through the sale of Meme coins. Senator Jeff Merkley ( bluntly stated: "This is the most blatant quid pro quo in history!"

3. The "revolving door" of legislative and executive powers: One of the core drafters of the bill, Republican Senator Hagerty, was exposed to have political donation ties with a certain political family-related company. The Democrats attempted to push an amendment to prohibit public officials from participating in stablecoin businesses, but were collectively blocked by the Republicans.

Despite the two parties reaching a compromise on May 15, removing provisions directly targeting a certain political family, Warren and others still launched a "final battle" in the Senate, demanding the disclosure of relevant funding flows. This moral tug-of-war is, in fact, a precursor to the 2026 midterm elections.

Market Volatility: Compliance Dividends and the "Oligopoly Era"

If the "GENIUS Act" is ultimately implemented, it will trigger a structural reshuffle in the stablecoin market:

1. Leading players "lying down to win": Some major stablecoins have already arranged compliant reserves of )80% in short-term U.S. Treasury bonds (, which will directly obtain federal licenses, further squeezing small and medium issuers. Goldman Sachs predicts that the market share of the two leading stablecoins may rise from 94% to 98%.

2. Traditional finance "cross-border harvesting": Some large banks have applied for "limited purpose stablecoin licenses" and plan to encroach on the market share of cryptocurrency exchanges through on-chain payment services. The provision in the bill that "allows insurance companies to issue stablecoins" further opens the floodgates for traditional giants.

3. The "antidote or poison" of the US debt crisis? The bill requires that stablecoin reserves be primarily composed of US debt, which may alleviate the liquidity crisis of US debt in the short term, but in the long term, it could exacerbate "maturity mismatch"—investors prefer short-term bonds, leading to a decline in demand for long-term US debt and further deterioration of the fiscal deficit.

4. The "Domino Effect" of Global Regulation: The EU, the UK, and Singapore have expressed their intention to adjust policies in reference to the "GENIUS Act", forming a "US Dollar Stablecoin Alliance". The Renminbi and Japanese Yen stablecoins may be squeezed out of the cross-border payment market, reshaping the global monetary landscape.

The War of the Future: The House Game and Final Judgment

Despite the Senate giving the green light, the bill still needs to pass three hurdles:

1. House "Simplified Customs Clearance": The Republican Party controls the House of Representatives with a 220:215 majority, requiring only a simple majority of 218 votes to pass. However, the House version of the STABLE Act has key differences with the Senate: the former requires regulatory authority to be fully under federal control and prohibits tech companies from issuing stablecoins. Coordination between the two chambers may be delayed until the August recess.

2. The President's "Cost-Benefit Analysis": Although a certain politician publicly supports the bill, their family's interests are deeply tied to the legislative details. If the Democrats push for the "Anti-Corruption Amendment" in the House of Representatives, it may trigger the President's veto power, leading to the failure of the legislation.

3. The "gray rhino" of judicial challenges: the Emoluments Clause of the U.S. Constitution prohibits the president from profiting from foreign governments, while 20% of users of a certain stablecoin are located in sanctioned countries like Iran and North Korea, which may trigger intervention from the Supreme Court.

Conclusion: "Dollar Hegemony 2.0" in the Crypto Era

The ultimate ambition of the "GENIUS Act" is not merely to regulate the market, but to embed the hegemony of the US dollar into the very DNA of blockchain. By bundling US debt with stablecoins, the US is building a "digital dollar empire" — every on-chain transaction globally is invisibly reinforcing the dollar's reserve status. However, the risks of this gamble are equally enormous: if DeFi) decentralized finance( circumvents compliant stablecoins, or if China accelerates the internationalization of the digital yuan, the act may become a "house of cards."

The game of politicians, the lobbying of interest groups, the craze of technological revolution - at this historical crossroads, the ultimate fate of the GENIUS Act will determine who will dominate the financial order of the next decade.