The GENIUS Act:

The Senate's stablecoin bill, by a vote of 308-122.  By bringing regulatory clarity to the asset class, the law is expected to stimulate the growth of the stablecoin industry. The GENIUS Act first passed the Senate on June 17 by a vote of 68-30, with 18 Democrats supporting the bill and 2 Republicans (Senators Hawley and Paul) voting against it. Two Senators were not present (Senators Cotton and Kelly). Broadly, the GENIUS Act creates a regime for the issuance and regulation of U.S. dollar-backed payment stablecoins. By bringing regulatory clarity to the asset class, the legislation, if passed into law, is expected to stimulate the growth of the stablecoin industry.

What the bill does

The bill sets forth standards for regulatory oversight, striking a balance between federal and state authorities.

The bill allows payment stablecoins to be issued by subsidiaries of banks and non-bank entities. Banks would be overseen by their primary federal regulator, while non-bank entities would be overseen at a federal level by the Office of the Comptroller of the Currency (OCC) or under qualifying state regimes.

Sets up reserve requirements, supervision and enforcement, ie at least 1 to 1 backing with U.S. dollars, short-term Treasuries (93 days or less), or similarly liquid assets.

Requires Bank Secrecy Act (BSA)/Anti-money Laundering (AML) compliance for issuers.

Mandates insolvency requirements with customer protections.

Other Key Provisions of the bill

Bank Permissibility:

Banks can issue stablecoins and act "as a principal or agent with respect to any payment stablecoin and payment of fees to facilitate customer transactions."

Preserves current custody practices, allowing banks to hold stablecoin reserves under existing rules.

Carves out tokenized deposits from the legislation.