Lawmakers Introduce Stablecoin Regulation Bill
Commentary by Gage Raju-Salicki
A bipartisan group of lawmakers introduced legislation to regulate payment stablecoins and establishing oversight for issuers.
Senator Bill Hagerty (R-TN), along with Senators Tim Scott (R-SC), Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) introduced the "Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025" (the "GENIUS Act").
The bill would, among other things:
- establish a framework for issuing and redeeming payment stablecoins.
- require stablecoin issuers to maintain reserves on a 1:1 basis, composed of assets such as US currency, Treasury bills and demand deposits.
- prohibit non-approved entities from issuing stablecoins.
- assign regulatory oversight to federal and state financial regulators, with the Federal Reserve, the OCC and the FDIC serving as primary regulators.
- require stablecoin issuers to undergo audits by registered public accounting firms and publicly disclose reserve holdings.
- implement consumer protections, including restrictions on "rehypothecation" (or reuse) of reserve assets and clear redemption policies.
- set standards for interoperability between different stablecoin networks.
- establish penalties for unauthorized issuance, with fines of up to $100,000 per day for violations.
In addition, the Act would direct the Department of the Treasury, in coordination with financial regulators, to study endogenously collateralized stablecoins—digital assets whose value is tied solely to another asset issued by the same entity.
Commentary
One of the first crypto bills in 2025 is focused on stablecoins. This bill, introduced by Senator Lummis, the inaugural chair of the Senate Banking Subcommittee on Digital Assets, and others, creates a broad framework for stablecoins in the United States. The House also introduced their version—with minor changes—yesterday.
The Senate bill is straightforward and largely non-onerous on issuers. It defines non-bank payment stablecoins and their issuers, requires 1:1 reserves backing the stablecoins and hands regulation of these entities to the Comptroller of Currency. Noteworthy too is its carveout for entities preferring to defer to state stablecoin regulation—albeit with a market capitalization restriction of not more than $10 billion. It also imposes civil penalties of not more than $100,000 per day for non-permitted issuance of payment stablecoins.
Given the pro-crypto nature of the 119th Congress and the Trump administration, the passage of stablecoin legislation is likely only a matter of time. Accordingly, it would make sense for entities that may issue stablecoins to consider using this bill as a roadmap to prepare for compliance. Getting ahead of the curve will be helpful for existing issuers to be market-ready when legislation is passed.