Key Insights:
- The GENIUS Act cleared a major Senate hurdle after 16 Democrats changed their votes and supported the bill.
- The bill passed the cloture vote with a 66-32 margin and moved to the full debate and amendment stage.
- The GENIUS Act proposes strict rules for stablecoin issuers, including 1:1 cash backing and criminal penalties for fraud.
The GENIUS Act cleared a major Senate hurdle after a surprising shift in support from key Democratic senators. The bill, which proposes new rules for stablecoins, passed a cloture vote with 66 senators in favor. The shift follows controversy surrounding the GENIUS Act’s potential links to President Donald Trump’s crypto interests.
GENIUS Act Advances After Senate Reversal
The GENIUS Act regained momentum after 16 Senate Democrats reversed their earlier opposition and supported the bill on Monday.
That stage of the legislation moved it past the cloture stage and into the full debate and amendment process. The bill passed this, but its final passage may not come until after Memorial Day.
Supporters argue the GENIUS Act provides needed regulation for U.S. dollar-backed stablecoins and helps prevent innovation from leaving the country.
The legislation requires stablecoins to be ‘fully reserved’ — meaning that they will be backed 1:1 by cash or its equivalent and imposes oversight of stablecoin issuers. It also adds criminal penalties for fraud to increase the trust level for the digital asset market.
Senate Republicans have pushed for the GENIUS Act as a key initiative to ensure U.S. dominance in the financial technology sector.
But advocates say it includes guardrails and space for growth in the wild west, which is the fast-evolving stablecoin space. They say global players could gain influence over U.S. financial systems without a national framework.
Trump-Linked USD1 Draws Warren’s Fire
Senator Elizabeth Warren has strongly criticized the GENIUS Act, citing potential benefits to Trump’s stablecoin project, USD1. She warned that the legislation would leave stablecoins open to private actors and create risks of financial misuse.
The bill would also give greater power to the crypto ventures of Trump’s family and fortify his financial conflicts of interest.
In his speech, Warren accused Trump of using USD1 to lock down deals’ with foreign entities just days before the Republican leader cut a $2 billion deal.
The deal—involving World Liberty Financial, a USD1 issuer, and MGX, a fund based in the UAE—raised transparency concerns. She argued that the GENIUS Act could shield such transactions from regulatory scrutiny and accountability.
Trump also allegedly encouraged personal promotion of the coin at his high-profile social get-togethers with highly valued holders, and the senator has criticized the president. She claimed such activities suggest conflicts of interest, as the GENIUS Act would expand opportunities for USD1’s growth. She says the bill doesn’t include protections to stop political figures from making money with crypto while in office.
Warren Demands Reforms to Crypto Bill
The GENIUS Act aims to reduce reliance on dominant stablecoins like Tether and Circle by supporting regulated U.S.-based alternatives.
But opponents say a bill to give the city political and legal control over the water supply might replace one monopoly with another, this time manned by the politically connected. However, this concern has only grown, particularly with the Trump family, which is now involved in crypto.
Trump’s current stablecoin, USD1, is now issued by World Liberty Financial, one of the fastest-growing stablecoins in the market.
The company’s rising influence and recent partnerships have drawn increased scrutiny as the GENIUS Act progresses. USD1’s inclusion in the top five stablecoins has made its role in the future regulatory landscape a central issue.
Supporters of the bill point to the modernization it would bring to financial policy, but opposition to the measure is firm on unresolved concerns.
As debate resumes this week, lawmakers were under pressure Monday to revise the bill to close any potential loopholes. It comes down to the Senate adding amendments to cap personal gain from crypto.
Warren has called on fellow senators to oppose the GENIUS Act unless it includes measures to prevent political self-enrichment.
She says the legislation must separate regulatory efforts from personal business gains by public officials. Absent such provisions, Warren says the bill could allow for private enrichment through government-backed regulation.
