Senate’s Stablecoin Bill Could Shake Up Crypto Industry

The U.S. Senate Banking Committee is set to vote this Thursday on a bipartisan stablecoin bill, the GENIUS Act, which could mark a major step toward regulatory clarity in the digital asset space.

Introduced by Senators Bill Hagerty (R-TN) and Tim Scott (R-SC), the legislation outlines reserve requirements, transparency rules, audits, and licensing standards for stablecoin issuers in the U.S.

If passed, the bill would advance President Donald Trump’s crypto policies and position the U.S. as a leader in stablecoin innovation and regulation.

“From enhancing transaction efficiency to driving demand for U.S. Treasuries, the potential benefits of strong stablecoin innovation are immense,” Sen. Hagerty stated.

“My legislation establishes a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto.”

New Rules for Stablecoin Issuers

The GENIUS Act allows stablecoin issuers to choose between federal or state charters, depending on their market capitalization. It also introduces “reciprocity agreements,” requiring foreign issuers to meet U.S. standards on:

✅ Reserves
✅ Anti-money laundering (AML) compliance
✅ Sanctions regulations
✅ Liquidity requirements

How the Bill Impacts USDC, RLUSD, and Foreign Issuers

Legal expert Jeremy Hogan, partner at Hogan & Hogan, noted that the bill aligns well with U.S.-based stablecoins like Circle’s USDC and Ripple’s RLUSD, which already claim compliance with many of the outlined provisions.

“The reserve requirements, anti-money laundering requirements, all fall neatly for RLUSD and USDC,” Hogan wrote on X.

However, the bill could also increase government oversight, as issuers may be required to “seize, freeze, burn, or prevent the transfer of payment stablecoins” under future regulatory orders.

This provision would give U.S. authorities greater control over digital assets within their jurisdiction, adding operational burdens to stablecoin issuers.

Tether (USDT) Could Face Compliance Challenges

One of the biggest shake-ups in the bill involves foreign-issued stablecoins, which could give U.S.-based stablecoins a competitive advantage over industry giant Tether (USDT).

Tether, the largest stablecoin issuer, is headquartered in Bitcoin-friendly El Salvador and lacks a formal U.S. presence. Unlike Circle and Ripple, Tether has historically backed USDT with a mix of Bitcoin, U.S. Treasury bills, and corporate paper.

A recent JP Morgan report suggests that Tether’s Bitcoin holdings may not meet the proposed U.S. compliance standards, potentially forcing the company to liquidate a portion of its BTC reserves.

This could impact Tether’s ability to maintain its 1:1 peg to the U.S. dollar, adding uncertainty to the stablecoin market.

Tether Appoints CFO Amid Growing Scrutiny

To bolster transparency and compliance efforts, Tether has appointed Simon McWilliams as its new Chief Financial Officer.

McWilliams, a seasoned finance executive with over 20 years of experience, is expected to lead Tether’s long-awaited full audit, a longstanding point of contention for critics who question the company’s financial practices.

Although Tether publishes quarterly attestations through auditing firm BDO, regulators and analysts have repeatedly called for more comprehensive financial disclosures.

What’s Next for Stablecoin Regulation?

While the GENIUS Act represents a major step toward regulatory clarity, it remains unclear how quickly issuers will adapt to the new standards. Many stablecoin providers have thrived in a largely unregulated market, allowing them to scale into multi-billion dollar enterprises with little oversight.

If the bill passes, stablecoin issuers may face increased scrutiny, while U.S.-based stablecoins could gain a stronger foothold over foreign competitors.

With Thursday’s Senate vote looming, all eyes are on how lawmakers will shape the future of stablecoin regulation in the U.S.