Author: White55, Mars Finance
1. Legislative process: a dramatic turn from "near death" to "resurrection"
From May to June 2025, the game of the US Senate around the GENIUS Act (full name: Guidance and Establishment of the United States Stablecoin National Innovation Act) can be described as an epic battle of politics and finance. This bill, which aims to establish the first federal regulatory framework for the $250 billion stablecoin market, has experienced a thrilling counterattack from "programmed death" to "bipartisan compromise", and finally advanced to the Senate plenary debate stage with a vote of 68 to 30. However, behind this victory are months of interest exchanges between the two parties, lobbying struggles by industry giants, and the moral controversy caused by the Trump family's "crypto gold mine".
Timeline review:
- March 2025: Republican Senator Bill Hagerty formally proposed a draft bill, aiming to establish a "federal + state" dual-track regulatory system for payment-based stablecoins.
- May 8th: The first procedural vote on the bill unexpectedly failed with a score of 48:49, and the Democrats collectively turned against it on the grounds of "Trump family conflict of interest."
- May 15th: The two parties held emergency consultations and introduced a revised bill to delete the provisions targeting the Trump family's encryption business in exchange for partial support from the Democratic Party.
- May 20: The amendment passed the key "Cloture Vote" with a vote of 66:32, clearing the legislative hurdle.
- June 11th: The Senate passed the bill with an overwhelming majority of 68:30, entering the final debate and amendment process.
Senate Majority Leader John Thune spoke on Wednesday in support of a vote to pass the Genius Act. Source: U.S. Senate
The core of this series of twists and turns is that the Republicans cleverly packaged the bill as a strategic tool for "digital hegemony of the US dollar", while the Democratic Party's position loosened due to concerns about "regulatory vacuum leading to financial risks". Senate Majority Leader John Thune's lobbying rhetoric was highly inflammatory: "If the United States does not dominate the stablecoin rules, China will fill the gap with digital RMB!"
2. Core clauses: regulatory blueprint and "devil's details"
The regulatory framework design of the GENIUS Act attempts to walk a tightrope between "encouraging innovation" and "preventing risks". Its core provisions can be summarized into the following six pillars:
Dual supervision and issuance thresholds
Stablecoins with an issuance scale of more than $10 billion are subject to federal supervision (led by the Office of the Comptroller of the Currency (OCC)). Stablecoins with an issuance scale of less than $10 billion can choose state-level supervision, but the state standards must be consistent with the federal standards. This design not only appeases the autonomy of each state, but also draws a red line for giants, and is seen as a disguised protection for Circle (USDC) and Tether (USDT).
1:1 Segregation of Reserves and Assets
Stablecoins are required to be fully collateralized by highly liquid assets such as cash and short-term U.S. Treasury bonds, and reserve assets must be strictly isolated from operating funds. This clause directly targets the Terra crash in 2022, but allows the inclusion of "risky assets" such as money market funds in reserves, which has been criticized as "laying mines."
Technology giants' "tight ring"
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 meet data privacy and antitrust requirements. This clause was interpreted as a "targeted attack" on Trump's ally Musk (X platform stablecoin plan).
Consumer Protection and Bankruptcy Priorities
If the issuer goes bankrupt, stablecoin holders can redeem their assets first, and the reserve funds will not be included in the bankruptcy property. However, the Democratic Party pointed out that this clause is weaker than the traditional bank FDIC insurance mechanism and there is a risk of "freezing funds".
Anti-Money Laundering and Transparency
The issuers of stablecoins are brought under the jurisdiction of the Bank Secrecy Act, and are required to fulfill obligations such as KYC and suspicious transaction reporting. However, the loophole is that decentralized exchanges (DEX) are not constrained, leaving a backdoor for illegal capital flows.
Presidential family "immunity loophole"
The bill does not explicitly prohibit members of Congress or relatives of the president from participating in the stablecoin business, and the USD1 stablecoin (market value of $2 billion) issued by World Liberty Financial (WLF) under the Trump family has been compliant. Democratic Senator Warren angrily denounced: "This is a green light for Trump's "crypto corruption"!"
3. Controversy vortex: Trump's "crypto gold mine" and the bipartisan split
The biggest obstacle to the bill's advancement does not come from policy details, but from the conflict of interest caused by the Trump family's deep involvement in the crypto industry. Three major controversial points have pushed the political game to a climax:
USD1 Stablecoin’s “Legalized Arbitrage”
USD1 issued by WLF has injected $2 billion into Binance through Abu Dhabi Investment Company, and the Trump family can earn more than $80 million a year through transaction fees. What's more fatal is that after the bill is passed, USD1 will automatically obtain federal recognition, and its market value may soar to tens of billions of dollars.
The moral crisis of "paid dating"
Trump provided "Presidential Dinner" qualifications to holders by selling Meme coins (such as TRUMP Coin), and was accused by the Democratic Party of "securitizing state power." Senator Jeff Merkley bluntly said: "This is the most naked power-for-money transaction in history!"
The revolving door of legislative and executive power
One of the core drafters of the bill, Republican Senator Hagerty, was exposed to have political donations with WLF. The Democratic Party tried to push for an amendment to prohibit public officials from participating in the stablecoin business, but was collectively blocked by the Republicans.
Although the two parties reached a compromise on May 15 and deleted the clauses directly targeting Trump, Warren and others still launched a "last fight" in the Senate, demanding the disclosure of the Trump family and WLF's financial flows. This moral offensive and defensive battle is actually a prelude to the 2026 midterm elections.
4. Market shock: Compliance dividend and the "oligopoly era"
If the GENIUS Act is finally implemented, it will trigger a structural reshuffle in the stablecoin market:
Top players "win easily"
USDC (Circle) and USDT (Tether) will directly obtain federal licenses because they have already laid out compliant reserves (80% of which are short-term US bonds), further squeezing out small and medium-sized issuers. Goldman Sachs predicts that the market share of the two may rise from 94% to 98%.
Traditional finance "cross-border harvest"
Institutions such as JPMorgan Chase and Wells Fargo have applied for "limited purpose stablecoin licenses" and plan to eat into the cryptocurrency exchange market through on-chain payment services. The clause in the bill that "insurance companies are allowed to issue stablecoins" has opened the floodgates for traditional giants.
Antidote or poison to the US debt crisis?
The bill requires that stablecoin reserves be mainly U.S. Treasuries, which may alleviate the U.S. Treasury liquidity crisis in the short term, but may aggravate the "maturity mismatch" in the long term - investors prefer short-term bonds, resulting in shrinking demand for long-term U.S. Treasury bonds and further deterioration of the fiscal deficit.
The "domino effect" of global regulation
The European Union, the United Kingdom, and Singapore have stated that they will adjust their policies in accordance with the GENIUS Act to form a "US dollar stablecoin alliance." The RMB and Japanese yen stablecoins may be squeezed out of the cross-border payment market, reshaping the global currency landscape.
V. Future Battle: Game of the House of Representatives and Trump’s “Final Decision”
Although the Senate has given the green light, the bill still needs to pass three hurdles:
House of Representatives "Simplify Customs Clearance"
The Republicans control the House of Representatives with a 220:215 majority, and only a simple majority (218 votes) is needed to pass. However, there are key differences between the House version of the STABLE Act and the Senate: the former requires that regulatory power be completely vested in the federal government and prohibits technology companies from issuing stablecoins. The coordination between the two houses may be delayed until the August recess.
The President’s “Balancing of Interests”
Although Trump publicly supports the bill, his family's interests are deeply tied to the details of the legislation. If the Democrats push for the "anti-corruption amendment" in the House of Representatives, it may trigger the president's veto and cause the legislation to fail.
The “Gray Rhino” of Judicial Challenges
The Emoluments Clause of the U.S. Constitution prohibits the president from profiting from foreign governments, and 20% of USD1's users are located in countries on the sanctions list (Iran, North Korea), which may trigger the Supreme Court to intervene.
Six. Conclusion: "Dollar Hegemony 2.0" in the Crypto Era
The ultimate ambition of the GENIUS Act is not just to regulate the market, but to implant the hegemony of the US dollar into the genes of the blockchain. By bundling US debt with stablecoins, the United States is building a "digital dollar empire" - every transaction on the chain in the world is invisibly consolidating the reserve status of the US dollar. However, the risks of this gamble are equally huge: if DeFi (decentralized finance) bypasses compliant stablecoins, or China accelerates the internationalization of the digital RMB, the bill may become a "house of cards."
The game of politicians, the lobbying of interest groups, the frenzy of technological revolution - at this crossroads of history, the ultimate fate of the GENIUS Act will determine who dominates the financial order of the next decade.
