A Key Stablecoin Bill Is Moving Through Congress. Here’s What It Does.

A long-anticipated stablecoin bill has broken through Senate opposition to bring a key piece of crypto legislation one step closer to becoming law.

The bill advanced in a procedural vote that garnered bipartisan support two weeks after Democrats balked at the proposed legislation.

Early opposition feared that the bill would enable conflicts in President Donald Trump’s crypto dealings, which have drawn scrutiny on both sides of the aisle. While some Democrats continued to staunchly resist the bill this week, an amended version was pushed advanced with a 66-32 vote.

With the Genius Act now headed for debate on the Senate floor, here’s what the legislation is aiming to accomplish

Broader oversight of a growing crypto space

The bill’s core purpose is to provide clearer rules for issuers of stablecoins, which are tokens pegged to fiat currencies like the dollar.

If passed, issuers will need to adhere to stricter standards, including regular disclosure of reserves. Stablecoins will need to be backed 1:1 by liquid reserves like fiat currency or other liquid assets like Treasurys.

Meanwhile, federal and state regulators would be required to provide capital, liquidity, and risk management rules for issuers that fall under their oversight.

An entity can issue a stablecoin as long as it qualifies on the federal or state level, and does not offer a yield on its stablecoin. Banks, credit unions, and nonbanks could become stablecoin issuers by registering with the appropriate federal regulator, as long as they meet baseline requirements.

The act also focuses on consumer protections and anti-money laundering efforts. This including barring foreign payment stablecoin issuers from offering tokens in the US, unless it can comply.

New changes

Reports on Tuesday state that the amended version of the act tacked on concessions to ease partisan concerns about conflict-of-interest and Big Tech.

However, some of the changes fall short of what the initial opposition among Democrats had been been aiming for.

For instance, the amended bill would prohibit top executive branch officials from launching stablecoins, but the US president and vice president would remain exempt. This effectively keeps the door open for Trump, whose family has grown involved in the stablecoin space.

A firm backed by the Trump family, World Liberty Financial, has already issued a stablecoin this year.

Reports also note that Big Tech would be restricted from issuing tokens if it tracked users’ financial data, but companies could effectively sidestep this if consent is given through a terms of service agreement.

Per Politico, other granted amendments included expanded limitations on interest-bearing stablecoins and strengthened provisions on anti-money laundering, national security, and consumer protections, which were sticking points for Democrats when the bill stalled two weeks ago.