Written by: White55, Mars Finance
- Legislative Process: A Dramatic Turn from “Near Death” to “Revival”
From May to June 2025, the U.S. Senate’s struggle over the GENIUS Act (officially titled the Guidance and Establishment of the American Stablecoin Innovation Act) can be described as an epic battle intertwined with politics and finance. This bill, aimed at establishing the first federal regulatory framework for the $250 billion stablecoin market, underwent a thrilling reversal from “procedural death” to “bipartisan compromise,” ultimately advancing to the Senate floor debate stage with a vote result of 68 to 30. However, behind this victory lies months of interest exchanges between the two parties, lobbying battles by industry giants, and the ethical controversies sparked by the Trump family’s “crypto gold mine.”
Timeline Review:
March 2025: Republican Senator Bill Hagerty officially introduced a draft bill aimed at establishing a “federal + state” dual regulatory system for payment stablecoins.
May 8: The bill unexpectedly failed the first procedural vote with a score of 48:49, as the Democrats collectively turned against it citing “Trump family conflict of interest.”
May 15: The two parties held urgent consultations, introducing a revised version of the bill, removing provisions targeting the Trump family’s cryptocurrency business in exchange for some support from the Democrats.
May 20: The amendment passed the key “cloture vote” with a vote of 66 to 32, clearing the legislative hurdle.
June 11: The Senate passed the bill with an overwhelming majority of 68 to 30, entering the final debate and amendment process.
Senate Majority Leader John Thune spoke on Wednesday in support of voting for the “Genius Act.” Source: U.S. Senate
The core of this series of twists lies in the Republican Party’s clever packaging of the bill as a strategic tool for “digital dollar hegemony,” while the Democratic Party shows signs of loosening its stance due to concerns that “regulatory vacuum could lead to financial risks.” Senate Majority Leader John Thune’s lobbying rhetoric is highly provocative: “If the U.S. does not lead on stablecoin rules, China will fill the void with digital yuan!”
II. Core Provisions: Regulatory Blueprint and “Devil in the Details”
The regulatory framework design of the “GENIUS Act” attempts to walk a tightrope between “encouraging innovation” and “mitigating risks,” with its core provisions encapsulated in the following six pillars:
Dual regulation and issuance threshold
Stablecoins with an issuance scale exceeding $10 billion are subject to federal regulation (led by the Office of the Comptroller of the Currency - OCC), while those below $10 billion may opt for state-level regulation, provided that state standards align with federal ones. This design both reassures state autonomy and sets boundaries for giants, seen as a de facto protection for Circle (USDC) and Tether (USDT).
1:1 reserve and asset isolation
It is mandatory to fully collateralize stablecoins with highly liquid assets such as cash and short-term U.S. Treasury bonds, and the reserve assets must be strictly segregated from operating funds. This provision directly addresses the 2022 Terra collapse incident, but it allows the inclusion of “risk assets” such as money market funds in the reserves, which has been criticized as “laying a trap.”
Technology giants’ “tightening spell”
Non-financial technology companies (such as Meta and Google) must obtain approval from the newly established “Stablecoin Certification Review Committee” (SCRC) to issue stablecoins, and fulfill data privacy and antitrust requirements. This clause has been interpreted as a “targeted strike” against Trump ally Musk’s (X platform stablecoin plan).
Consumer Protection and Bankruptcy Priority
If the issuer goes bankrupt, stablecoin holders can redeem their assets preferentially, and the reserves are not included in the bankruptcy estate. However, the Democrats point out that this clause is weaker than the traditional bank FDIC insurance mechanism, posing a risk of “frozen funds.”
Anti-money laundering and transparency
Incorporate stablecoin issuers under the jurisdiction of the Bank Secrecy Act, mandating compliance with KYC, suspicious transaction reporting, and other obligations. However, the loophole is that decentralized exchanges (DEX) remain unregulated, leaving a backdoor for illicit fund flows.
President’s family “exemption loophole”
The bill does not explicitly prohibit members of Congress or relatives of the president from participating in the stablecoin business, allowing the USD1 stablecoin (with a market cap of $2 billion) issued by World Liberty Financial (WLF), owned by the Trump family, to become compliant. Democratic Senator Warren angrily declared: “This is giving a green light to Trump’s ‘crypto corruption’!”
Three, the vortex of controversy: Trump’s “crypto gold mine” and the division between the two parties
The biggest resistance to the bill’s advancement does not come from policy details, but rather from the deep involvement of the Trump family in the conflicts of interest within the cryptocurrency industry. The three major points of contention push the political game to a climax:
The “legalization arbitrage” of the USD1 stablecoin
USD1 issued by WLF has injected $2 billion into Binance through the Abu Dhabi Investment Company, with the Trump family potentially earning over $80 million annually from trading fees. More critically, after the bill passes, USD1 will automatically gain federal recognition, and its market value may soar to the tens of billions level.
The moral crisis of “pay-to-meet”
Trump is accused by Democrats of “securitizing national power” by offering holders the qualification for a “Presidential Dinner” through the sale of Meme coins (such as TRUMP Coin). Senator Jeff Merkley bluntly stated, “This is the most blatant quid pro quo in history!”
The “revolving door” of legislative and executive power
One of the core drafters of the bill, Republican Senator Hagerty, has been exposed for having a political donation association with WLF. The Democrats attempted to push an amendment to prohibit public officials from participating in stablecoin operations but were collectively blocked by the Republicans.
Although the two parties reached a compromise on May 15, removing the provisions directly targeting Trump, Warren and others still launched a “final push” in the Senate, demanding to disclose the financial flows between the Trump family and WLF. This moral battle is, in fact, a prelude to the 2026 midterm elections.
Four, Market Fluctuation: Compliance Dividends and the “Oligopoly Era”
The “GENIUS Act” will trigger a structural reshuffle in the stablecoin market if it is ultimately implemented:
Top players “lying win”
USDC (Circle) and USDT (Tether) will directly obtain federal licenses due to their early layout of compliant reserves (80% in short-term U.S. Treasury bonds), further squeezing smaller issuers. Goldman Sachs predicts that their market share may increase from 94% to 98%.
Traditional finance “cross-border harvesting”
Institutions such as JPMorgan Chase and Wells Fargo have applied for a “limited purpose stablecoin license,” planning to encroach on the market share of cryptocurrency exchanges through on-chain payment services. The provision in the bill that “allows insurance companies to issue stablecoins” further opens the floodgates for traditional giants.
The “cure or poison” for the US debt crisis?
The bill requires stablecoin reserves to be primarily composed of U.S. Treasury securities, which may alleviate the liquidity crisis of U.S. Treasuries in the short term, but could exacerbate “maturity mismatch” in the long term—investors prefer short-term bonds, leading to a decline in demand for long-term U.S. Treasuries and further worsening the fiscal deficit.
The “Domino Effect” of global regulation
The EU, the UK, and Singapore have expressed their intention to adjust policies in accordance with the “GENIUS Act” to form a “US Dollar Stablecoin Alliance.” The RMB and JPY stablecoins may be squeezed out of the cross-border payment market, reshaping the global currency landscape.
V. The War of the Future: The House of Representatives Game and Trump’s “Final Verdict”
Although the Senate has given the green light, the bill still needs to pass three hurdles:
House of Representatives “Simplified Customs Clearance”
The Republican Party controls the House of Representatives with a vote of 220:215, requiring only a simple majority (218 votes) to pass. However, the House version of the STABLE Act has key differences with the Senate: the former requires full regulatory power to belong to the federal government and prohibits technology companies from issuing stablecoins. Coordination between the two houses may be delayed until before the August recess.
The President’s “interest balance”
Although Trump openly supports the bill, his family’s interests are deeply tied to the legislative details. If the Democrats push for the “Anti-Corruption Amendment” in the House of Representatives, it could trigger the president’s veto power, leading to the failure of the legislation.
The “gray rhino” of judicial challenges
The U.S. Constitution’s “Emoluments Clause” prohibits the president from profiting from foreign governments, and the fact that 20% of USD1 users are located in sanctioned countries (Iran, North Korea) could trigger intervention from the Supreme Court.
- Conclusion: The “Dollar Hegemony 2.0” in the Era of Cryptocurrency
The ultimate ambition of the “GENIUS Act” is not merely to regulate the market, but to embed the hegemony of the US dollar into the DNA of blockchain. By bundling US Treasury bonds with stablecoins, the US is building a “digital dollar empire”—every on-chain transaction globally is, in an invisible way, reinforcing the reserve status of the dollar. However, the risks of this gamble are equally huge: if DeFi (decentralized finance) bypasses compliant stablecoins, or if China accelerates the internationalization of the digital renminbi, the act could devolve into a “house of cards.”
The game of politicians, the lobbying of interest groups, and the frenzy of technological revolution—at this historical crossroads, the ultimate fate of the GENIUS Act will determine who dominates the financial order of the next decade.
