What's the GENIUS Act stablecoin bill that just passed the US Senate?

The US Senate passed the GENIUS Act, a federal bill that puts crypto stablecoins under direct government control, after the crypto industry spent millions lobbying in last year’s elections.

This legislation is now the first national law that forces stablecoin issuers to follow Treasury and law enforcement rules. It covers how they’re registered, how they’re monitored, and how the government can step in if things go sideways.

The bill specifically targets stablecoins pegged to fiat like the US dollar. These coins are popular for holding value while moving between volatile tokens, and they’re often used in cross-border payments. Without this bill, crypto companies were already starting to operate offshore, where oversight was weaker. The GENIUS Act locks them back into the system.

GENIUS Act treats stablecoin issuers like banks

Senator Bill Hagerty from Tennessee introduced the GENIUS Act on February 4, 2025. He was joined by co-sponsors Tim Scott from South Carolina, Cynthia Lummis from Wyoming, Kirsten Gillibrand from New York, and Angela Alsobrooks from Maryland. This bill builds on earlier proposals from 2024, including the Lummis-Gillibrand Payment Stablecoin Act and a draft bill discussed in October.

The law forces payment stablecoin issuers to register as financial institutions under the Bank Secrecy Act. That’s a big deal. It means they now have to follow anti-money laundering laws, check names against sanctions lists, report suspicious activity, appoint a compliance officer, and keep full transaction records. Any issuer that doesn’t meet these rules can’t legally operate in the US

These firms must also run ID checks on account holders, especially for big transactions. And they need to prove they can freeze or even burn wallets if ordered by law enforcement. This rule applies to both US and foreign issuers trading in American secondary markets. If a foreign issuer ignores a legal order, the Treasury Department is required to label them as non-compliant. That label means US crypto platforms must cut them off.

Treasury gets more power to monitor stablecoins

The bill expands Treasury Secretary Scott Bessent’s role in enforcing sanctions. If the department wants to block a foreign-linked transaction, Scott is now required to first coordinate with a permitted stablecoin issuer—if possible. That extra step is meant to make sure legal users aren’t caught in the crossfire while the Treasury tracks illegal funds.

By classifying issuers as financial institutions, the law gives both the Treasury and the Department of Justice more tools to go after criminal activity. In the past, stablecoins were involved in several of the biggest settlements both agencies have handled. The GENIUS Act tries to prevent more of that by tightening the rules and keeping these coins from being used to dodge US sanctions or launder money.

The law is also pitched as a move to keep the US dollar strong worldwide. By making stablecoins safer, cleaner, and tied directly to US Treasuries, lawmakers say global demand for these coins could rise. That would increase purchases of American debt, which might lower borrowing costs and push more international users into the dollar-based crypto economy.

Scott Bessent said on X that stablecoins could reach a $3.7 trillion market by the end of the decade. He argued that if the GENIUS Act is enforced, it would boost private sector demand for US Treasuries, which are used to back stablecoins.

That demand, he claimed, might reduce government borrowing costs, help bring down the national debt, and onboard millions of users globally into a US dollar-based crypto system. He framed it as a win for the private sector, the Treasury, and consumers.

The GENIUS Act passed with that argument front and center. Without regulation, companies move offshore, and regulators lose visibility. With this law, every stablecoin issuer that wants US access now needs to follow federal rules, help fight crime, respect sanctions, and comply with real-time orders from US authorities.

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