United States Senator Bill Hagerty (R-TN) has introduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which would create a regulatory framework for U.S. dollar-pegged stablecoins, including prohibiting algorithmic stablecoins, requiring one-to-one reserves, and ensuring issuers comply with anti-money-laundering (AML) and sanctions rules.
In a February 4 statement, the Tennessee Republican said the GENIUS Act “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.”
Among the key aims of the GENIUS Act are to define payment stablecoins as “a digital asset used for payment or settlement that is pegged to a fixed monetary value,” establish clear procedures for firms seeking licenses to issue stablecoins, and “light-touch, tailored regulatory standards” for issuers.
The bill would also establish “supervisory, examination, and enforcement regimes with clear limitations,” possibly alluding to the Securities and Exchange Commission’s (SEC) approach to regulatory oversight under previous chairman Gary Gensler, who was often accused—arguably unfairly—of regulatory overreach.
In terms of specific standards for stablecoin issuers, the GENIUS Act includes a ban on algorithmic stablecoins—digital assets that maintain price stability through automated algorithms and smart contracts, rather than being backed by traditional assets, such as fiat reserves, bond, or funds—and a mandate to maintain reserves backing the stablecoins on at least a one-to-one basis, reserves which may not be “pledged, rehypothecated, or reused.”
It also requires that stablecoin issuers publish a monthly report on their website containing the total number of outstanding stablecoins issued, and the amount and composition of the reserves. This information must then be examined by a registered public accounting firm.
The bill was supported by Senate Banking, Housing, and Urban Affairs Committee Chairman Tim Scott (R-SC), along with Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY).
“This legislation will expand financial inclusion and provide much-needed clarity to ensure the industry can innovate and grow here in the United States, while protecting consumers and promoting the U.S. dollar’s global position,” said Scott. “I look forward to working with our colleagues… to advance this legislation to President Trump’s desk.”
Democrat co-signee Gillibrand highlighted the bill’s bipartisan credentials, while underscoring its dual goals of consumer protection and supporting U.S. innovation.
“Passing clear and sensible regulations for stablecoins is critical to maintaining U.S. dollar dominance, promoting responsible innovation, and protecting consumers,” said Gillibrand, adding that, “the future of stablecoins and cryptocurrency has strong bipartisan support—I’m proud to introduce this bill.”
The GENIUS Act builds on the discussion draft Hagerty submitted last October for the former Chair of House Financial Services Committee Patrick McHenry’s Clarity for Payment Stablecoins Act.
On Tuesday, Hagerty posted on X that he was looking forward to working with McHenry’s successor, new House Financial Services Committee chair Rep. French Hill (R-AR), to get the GENIUS Act “to the president’s desk and signed into law.”
The bill’s tabling also coincided with a February 4 press conference by White House AI and digital asset Czar David Sacks, who expressed support for advancing stablecoin legislation in the coming months.
“Stablecoins have the potential to ensure American dollar dominance internationally to increase the usage of the US dollar digitally as the world’s reserve currency and, in the process, create potentially trillions of dollars of demand for the US Treasury,” said Sacks.
Watch: Breaking down solutions to blockchain regulation hurdles
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