US Senate passes GENIUS Act: Strong comeback for stablecoins!

US Senate passes GENIUS Act: Strong comeback for stablecoins!

On June 17, 2025, the U.S. Senate passed the GENIUS Act with a bipartisan majority of 68-30. This law, which stands for “Guiding and Establishing National Innovation for U.S. Stablecoins,” represents the first comprehensive regulatory framework for stablecoins in the United States. The goal of the law is to strengthen the connection between the U.S. dollar and cryptocurrencies and thus consolidate the dominance of the U.S. dollar in the digital economy. The bill now needs to be approved by the House of Representatives and signed by President Trump.

The GENIUS Act ends a long-standing regulatory vacuum and creates clear framework conditions for stablecoin issuers. Providers will be required to establish 100% backing of their stablecoins in US dollars, short-term US treasuries or comparable liquid assets. They also have to disclose their reserves on a monthly basis. The largest stablecoins, including Tether (USDT), USD Coin (USDC) and Euro stablecoin EURC, have a combined market capitalization of around $256 billion, with Tether accounting for around 60 percent of this market capitalization.

Regulatory measures and consumer interests

The law requires issuers with market capitalizations over $10 billion to be subject to direct supervision by the Federal Reserve or the Office of the Comptroller of the Currency (OCC). The GENIUS Act also implements strict anti-money laundering and KYC requirements. It also bans advertising that suggests false U.S. government guarantees for stablecoins. In the event of bankruptcy, stablecoin holders have priority over other creditors, which is intended to increase security for users. However, consumer advocates criticize that the law does not sufficiently address possible risks to financial stability and argue that providers could carry out financial transactions without official supervision.

Analysts expect that the GENIUS Act could increase demand for stablecoins and the US dollar. In the long term, regulation could strengthen trust in the market and lower the barriers to entry for new issuers. Supporters of the regulation from the cryptocurrency industry hope to see increased adoption of stablecoins, which offer more stable performance compared to volatile cryptocurrencies. However, risks remain as a potential loss of confidence in the coverage could lead to a decline in the value of the stablecoins. Regulators are also warning of a possible “bank run”-like scenario.

Policy implications and market reactions

The passage of the GENIUS Act is seen as a major milestone for the regulation of the cryptocurrency industry. Critics of the law accuse the Senate of supporting Trump's personal crypto ambitions. Trump is accused of profiting financially from a company that issues digital tokens. The Conference of State Bank Supervisors (CSBS) emphasizes the need for responsible use of stablecoins and warns of the risks to financial stability. Despite these concerns, the GENIUS Act could result in the US dollar becoming increasingly intertwined with cryptocurrencies and thus decisively shape the future of the digital economy.

The potential role of central bank digital money could also become relevant in this discussion, as it could potentially make stablecoins obsolete, which Commerzbank has hinted at as a future development. In this charged and dynamic market, it remains to be seen how the legal framework and innovations will develop.