Senate passes GENIUS Act, giving ‘leg up’ to big banks

The United States Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act on June 17, awarding the crypto industry its first major legislative victory.

The GENIUS Act, which passed 68-30, would establish federal guardrails for U.S. dollar-pegged stablecoins and create a regulated pathway for private companies to issue digital dollars once they gain regulatory approval from the government, according to the U.S. Congressional website.

[caption id="attachment_57380027" align="alignright" width="300"] (Courtesy/Bloomberg)[/caption] The bill must now pass the House of Representatives before heading to President Donald Trump ’s desk for his signature.

Under the passed regulation:

Any insured depository institution can issue stablecoin once it gains permission from a state or federal regulator, like the Office of the Comptroller of the Currency ; Issuers must maintain a 1-to-1 reserve of dollars or U.S. Treasuries in case of a run on the bank. It also bans rehypothecation, or re-use of collateral, of the stablecoin; Clear procedures of timely redemption of the asset must be set; Issuers and custodians should be able to freeze assets on legal requests; and Reserves must be held with FDIC-insured and OCC-chartered banks or other institutions. Recent reporting projects that stablecoins could grow into a $3.7 trillion market by the end of the decade. That scenario becomes more likely with passage of the GENIUS Act.

A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back… — Treasury Secretary Scott Bessent (@SecScottBessent) June 17, 2025

The pro-crypto bill will also strengthen the role of the dollar as the reserve currency in global markets, U.S. Sen. Bill Hagerty, R-Tenn., said June 16, as first reported Fox News .

“The bill sets the stage for moving into a modern-day payments industry in the 21st century,” Hagerty said. The bill will also make “the dollar a key element in the digital arena” by stimulating demand for U.S. Treasuries, he added.

Payments industry impact Major payments giants including Visa and Mastercard could feel the effect of stablecoins first if they don’t get ahead of the innovation curve, Edward Woodford , chief executive of crypto company Zero Hash , told Bank Automation News .

Major retailers like Amazon and Walmart are exploring issuing their own stablecoins, the Wall Street Journal reported.

“The news led to Visa and Mastercard dropping by 5% each,” Woodford said. “With stablecoins, businesses can circumvent Visa and Mastercard payment rails and save billions in transaction fees.”

Any business with a global scale and a huge customer base will evaluate stablecoins, Woodford said, adding that the money the businesses can save on transaction fees can be used to give consumers rewards and perks to incentivize them to use their stablecoins.

The two payments giants won't be “twiddling their thumbs” though, Woodford said, adding that both companies have been experimenting with stablecoins for years and, with clarity on regulations, will look to roll out products to gain market share early.

Bank impact The impact on the banking sector is different.

“The bill always gave a big leg up to banks,” Eli Cohen , general counsel of asset tokenization service provider Centrifuge, told BAN . “The [anti-money laundering] procedures and the capital backing required are both criteria the banks meet immediately, and anyone else would have to build one or both of these, which takes time and money.”

Passage of the GENIUS bill could help bring U.S. traditional finance markets “onchain,” Cohen said. “The U.S. financial market is the biggest in the world so the significance of having megabanks like Citi and JP Morgan Chase be part of crypto cannot be underestimated.”

The $3.5 trillion JPMorgan filed for a trademark on a stablecoin called “JPMD,” on June 15.

Clarifying regulation, innovation “Whether you directly operate in crypto, stablecoin or payments space, just having clear regulation is a huge improvement over where we were earlier,” Erica Dorfman , executive vice president of global financial products at fintech Brex , told BAN , adding that companies can safely use stablecoins for a variety of use cases to make payments cheaper and faster.

Financial institutions including Santander , Vantage Bank and BNY are exploring the use of stablecoins for:

Cross-border payments; Liquidity management; and Asset management and payments. Consumer protections addressed The bill was introduced in the Senate in early May, and lawmakers on both sides of the aisle urged the addition of rules that would help the government regulate stablecoins more precisely, Cohen said.

Some major changes to the new bill, he said, are:

Adding guardrails to help consumers understand stablecoins and create mechanisms to resolve consumer complaints; Broadening the definition of what would be considered yield to avoid speculation; Including stricter rules for publicly traded companies issuing stablecoins; and Providing wider authority over non-U.S. stablecoin issuers, including the ability to delist them from U.S. exchanges. Many Democratic legislators do not support the bill and say it lacks strong protections from “conflicts of interest stemming from crypto ventures by members of the administration and their families,” Cohen said.

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Senate passes GENIUS Act, giving ‘leg up’ to big banks

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Senate passes GENIUS Act, giving ‘leg up’ to big banks

$3.5T JPMorgan Chase filed for a trademark on ‘JPMD’ stablecoin June 15

Digital banking transactions: Shoreline CU selects Mahalo

Podcast: Inside Spring by Citi embedded finance, payments services

Related Posts

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