New Congressional Initiative on Stablecoin Regulation
The newly convened Congress is set to make waves in the cryptocurrency sector with an ambitious plan to introduce a stablecoin oversight bill spearheaded by Senator Bill Hagerty. Scheduled for unveiling on Tuesday, this legislation aims to establish a comprehensive regulatory framework for the issuance of dollar-pegged tokens, according to a source familiar with the matter.
Senator Hagerty, a Republican from Tennessee, previously championed a stablecoin initiative during the last congressional session. This time, he is bolstered by the support of the Senate Banking Committee’s new chairman, Tim Scott, and the head of its digital assets subcommittee, Cynthia Lummis. This marks a significant shift from the previous efforts in 2024, which struggled to gain traction due to the crypto-related roadblocks set up by former committee chair Sherrod Brown, a Democrat from Ohio, who was defeated in the November elections.
Hagerty’s proposed legislation, titled the Guiding and Establishing National Innovation in U.S. Stablecoins (GENIUS) Act, seeks to clearly define payment stablecoins and outline the processes for their issuance. The bill designates the Federal Reserve as the primary overseer for major bank issuers and assigns the Office of the Comptroller of the Currency the role of regulator for nonbank issuers with assets exceeding $10 billion. Furthermore, the legislation stipulates the reserve requirements that issuers must maintain.
State regulators will oversee smaller issuers, while larger entities will have the option to apply for waivers. This delineation between federal and state regulatory authorities had previously been a contentious issue during bipartisan attempts to forge a compromise bill on stablecoins in the last Congress. The success of any new iteration will depend on its ability to navigate this complex political landscape. It remains to be seen whether Hagerty’s proposal, which Senator Lummis indicated she would actively work to advance, will garner Democratic support given its more lenient regulatory stance.
In the previous congressional session, the House of Representatives successfully passed a stablecoin oversight bill; however, it faced significant challenges in securing a corresponding version in the Senate, a task that Hagerty had aimed to accomplish. He is poised to introduce the new legislation today, as first reported by Bloomberg News and confirmed by Hagerty via a post on social media platform X.
Stablecoins are designed to be stable cryptocurrency tokens, typically pegged to other assets such as the U.S. dollar. The leading global stablecoin is Tether (USDT), with its American counterpart being Circle (USDC). Later on Tuesday, David Sacks, who served as a crypto advisor under President Donald Trump, is scheduled to lead a press conference alongside congressional leaders to outline their strategic vision for cryptocurrencies. It is anticipated that the topic of stablecoin regulation will be a focal point during this event.
