Senators Propose Stablecoin Bill with Strict Issuance Rules

A new stablecoin bill, titled the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 ($GENIUS Act), has been introduced in the U.S. Senate to regulate the issuance and oversight of payment stablecoins. Sponsored by Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand, and Cynthia Lummis, the stablecoin bill establishes federal and state regulatory frameworks for stablecoin issuers and seeks to ensure financial stability and consumer protection.

Inside New Stablecoin Bill

Under the proposed law, only permitted payment stablecoin issuers—which include certain insured depository institutions and qualified nonbank entities—will be allowed to issue stablecoins in the U.S. market. The bill mandates issuers to maintain reserves that fully back outstanding stablecoins at a 1:1 ratio, with acceptable reserve assets including U.S. currency, demand deposits, and short-term Treasury securities.

Transparency is a key requirement, as stablecoin issuers must publicly disclose their redemption policies and ensure timely redemptions. Additionally, they are required to publish monthly reports detailing their reserve composition. These reports must be examined by a registered public accounting firm, with the issuer’s CEO and CFO providing a formal certification of accuracy. Any false certifications could lead to criminal penalties under U.S. law.

The $GENIUS Act also prohibits the rehypothecation of stablecoin reserves. This means that issuers cannot pledge or reuse reserves except in limited cases such as collateralizing short-term repurchase agreements of 90 days or less.

🚨NEW: Here’s the official text for @SenatorHagerty’s stablecoin bill.

Curious to know industry thoughts. Drop them below.https://t.co/Tmsjd7f5No https://t.co/1wHnAgraeV pic.twitter.com/Nm8M9fok9A

— Eleanor Terrett (@EleanorTerrett) February 4, 2025

The bill grants federal regulators, including the Comptroller of the Currency, oversight authority to ensure the safety and soundness of issuers. Stablecoin issuers must adhere to capital, liquidity, and risk management requirements, which include compliance with the Bank Secrecy Act and anti-money laundering regulations.

Additional Details

A notable provision of the bill is the option for state-level regulation. Stablecoin issuers with a market capitalization below $10 billion may opt for regulation under state authorities, provided the state regulatory framework is deemed substantially similar to federal requirements. If an issuer exceeds this threshold, it must transition to federal oversight within 360 days or halt issuing new stablecoins.

The bill also addresses bankruptcy protections, giving first priority to claims from stablecoin holders in insolvency proceedings. Additionally, it calls for interoperability standards for stablecoins to facilitate seamless transactions between different networks.

The $GENIUS Act is set to take effect within 18 months of enactment or 120 days after federal regulators finalize its implementation rules. Until then, existing applicants may receive a 12-month waiver from compliance requirements.