Senator Bill Hagerty Will Introduce a Bill to Establish a Framework for Stablecoins

The bill is called the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act.

Senator Bill Hagerty (R-TN) will introduce a bill on Tuesday to establish a framework for stablecoins, a type of cryptocurrency that stays stable by being backed by the US dollar or other assets.

The bill is called the "Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act." It has the support of Democratic Senator Kirsten Gillibrand (D-NY) and Republican Senators Tim Scott (R-SC) and Cynthia Lummis (R-WY).

"This legislation will provide a clear and predictable regulatory framework that encourages innovation and supports President Trump's goal of making the U.S. a leader in crypto," Hagerty said in a statement.

The legislation outlines rules for issuing stablecoin payments. It requires stablecoin payments to be backed with cash, Treasury bills, or other safe assets. Companies issuing stablecoins must also submit monthly audited reports on their reserves, with penalties for false reporting.

The stablecoin market reached a valuation of $205 billion by the end of 2024. The market is largely dominated by cryptocurrency firm Tether Holdings Ltd. Cantor Fitzgerald, owned by incoming Commerce Secretary Howard Lutnick, has a stake in Tether.

The bill would require stablecoin issuers to submit monthly audited reports on their reserves. Providing false information would be subject to criminal penalties.

Regulators have raised concerns about whether stablecoin issuers, such as Tether's USDT, have sufficient reserves to handle large withdrawals during market stress. Nonbank stablecoin issuers would be regulated by the Office of the Comptroller of the Currency (OCC), a bureau within the Treasury Department.

Trump has pledged to support the crypto industry by easing regulations and appointing crypto-friendly officials. Trump was once skeptical of crypto, but he shifted his position during the 2024 election as crypto executives backed his campaign.

Last month, Trump issued an executive order to promote the development of digital assets in the United States. He also halted work on a central bank digital currency (CBDC), which some view as a competitor to stablecoins.

While his order created a team to recommend new crypto rules, any actual policy changes would need approval from Congress. Both Democrats and Republicans have expressed interest in setting stablecoin regulations.

Trump's approach stands in contrast to that of former President Biden, who was skeptical of crypto and focused on investigations and enforcement rather than establishing clear rules.