S.394 - Guiding and Establishing National Innovation for U.S. Stablecoins of 2025; GENIUS Act of 2025 (119th Congress)
Summary
The GENIUS Act of 2025 aims to establish a regulatory framework for payment stablecoins in the United States. It defines key terms, sets requirements for issuing stablecoins, and designates regulatory authorities. The bill differentiates between federal and state-level regulatory regimes based on market capitalization, and includes provisions for supervision, enforcement, and customer protection.
Expected Effects
This act will create a legal structure for stablecoins, potentially fostering innovation and growth in the digital asset space. It may also increase consumer confidence in stablecoins by setting standards for reserves and redemptions. However, the act could also increase compliance costs and regulatory burdens for stablecoin issuers.
Potential Benefits
- Provides a clear legal framework for payment stablecoins, reducing uncertainty and encouraging investment.
- Establishes consumer protections, such as reserve requirements and redemption policies, increasing trust in stablecoins.
- Creates a pathway for both federal and state-regulated stablecoin issuers, allowing for flexibility and innovation.
- Enhances the United States' position in the global digital asset market by providing regulatory clarity.
- Includes provisions for interoperability standards, promoting compatibility between different stablecoin systems.
Potential Disadvantages
- Increases regulatory burden and compliance costs for stablecoin issuers, potentially stifling innovation.
- Could create barriers to entry for smaller stablecoin issuers due to capital and compliance requirements.
- May lead to a fragmented regulatory landscape if state-level regimes are not substantially similar to the federal framework.
- Could concentrate power among larger, well-capitalized institutions that can afford to comply with the regulations.
- The transition to federal regulation for larger state-regulated issuers could disrupt existing business models.
Constitutional Alignment
The GENIUS Act appears to align with the Commerce Clause (Article I, Section 8) by regulating interstate financial activities. The Act also delegates authority to various federal agencies, which is a common practice but must be balanced with the principle of non-delegation. The Tenth Amendment is implicated by the bill's treatment of state-level regulatory regimes, requiring careful consideration to avoid undue federal overreach.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).