Senator Bill Hagerty Set to Introduce Stablecoin Legislation Targeting Nonbank Issuers

Senator Bill Hagerty is set to introduce legislation aimed at creating a regulatory framework for stablecoins. This initiative, scheduled for Tuesday, reflects a growing desire among Republican lawmakers to establish crypto-friendly guidelines within the financial system.

Republican Senator Bill Hagerty is set to introduce legislation on Tuesday that would establish a regulatory framework for stablecoins, reflecting a growing push among GOP lawmakers to establish crypto-friendly guidelines within the financial system.

Stablecoins, cryptocurrencies designed to maintain a stable value by pegging their worth to traditional assets like the US dollar, have gained traction as a bridge between digital currencies and the conventional financial system.

Proponents argue that a federal regulatory framework could enhance the legitimacy of stablecoins, leading to broader adoption and integration into everyday transactions.

“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,” Hagerty said in a statement.

The senator is joined by Democrat Kirsten Gillibrand, Republican Tim Scott, and pro-Bitcoin Senator Cynthia Lummis in co-sponsoring the bill, highlighting bipartisan support for the emerging sector.

The legislation, dubbed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, outlines specific rules for issuing stablecoin payments.

It mandates that these digital currencies be backed by US currency, Federal Reserve notes, Treasury bills, and other secure assets—a crucial provision given the scrutiny surrounding the reserves backing popular stablecoins, such as Tether's USDT stablecoin.

Another key aspect of the GENIUS Act is its push for transparency. Under the proposed regulations, issuers of these digital assets would be required to disclose audited reports on the reserves backing their stablecoins on a monthly basis.

False reporting could lead to criminal penalties, underscoring the commitment to accountability and security in this rapidly evolving market.

The bill would also place nonbank stablecoin issuers under the supervision of the Office of the Comptroller of the Currency, further solidifying regulatory oversight in this area.

Trump's renewed engagement in the crypto space marks a significant shift from his earlier skepticism toward digital assets. During his 2024 campaign, the President has embraced the industry, urging regulatory changes to foster innovation.

Last month, Donald Trump signed an executive order advocating for the development of lawful dollar-backed stablecoins globally and expressing opposition to a central bank digital currency (CBDC), which could potentially compete with these digital assets.

This proactive stance contrasts with the approach taken by the Biden administration, which prioritized investigations and enforcement actions over regulatory clarity led by the US Securities and Exchange Commission (SEC).

Both Democrats and Republicans in Congress have shown interest in addressing the complexities of stablecoin regulation, signaling a potential bipartisan effort to establish a cohesive framework.