Senate Passes GENIUS Act, Spotlighting $230 billion Stablecoin Impact

- Senate approves GENIUS Act with strong bipartisan support. - Experts raise alarms over potential systemic risks to U.S. Treasury market. On June 18, 2025, Cointelegraph reported that the U.S. Senate passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act on June 17, 2025, with a 68-30 bipartisan vote. This legislative framework for regulating stablecoins has sparked debate over potential systemic risks. The GENIUS Act includes several provisions, such as rules for stablecoin issuers, Anti-Money Laundering (AML) measures, and a mandate for 1:1 backing of stablecoins with reserves like U.S. dollars or short-term Treasury securities. Proponents, like Senator Bill Hagerty, believe the bill will solidify U.S. dollar dominance, protect consumers, and increase demand for U.S. Treasuries. However, economic and legal experts, including Professor Yesha Yadav from Vanderbilt University and Brendan Malone, formerly of the Federal Reserve Board, have expressed concerns. They worry the act's preference for U.S. Treasuries as backing could pose systemic risks, arguing that requiring stablecoin issuers to hold significant amounts of short-term Treasuries could strain the Treasury market. This concern is amplified by the stablecoin market's rapid expansion, which grew from approximately $2 billion in 2019 to around $230 billion in the first quarter of 2025. The U.S. Treasury market has already experienced liquidity problems; therefore, a large-scale liquidation by a major stablecoin issuer might struggle to find enough buyers. This scenario could potentially lead to the issuer's insolvency and undermine the Treasury market's credibility. Furthermore, these experts fear this increased demand could crowd out other investors and influence U.S. government funding strategies. The GENIUS Act will now move to the House of Representatives, where lawmakers must reconcile it with the House's own STABLE Act. Key discussion points will likely include the structure of federal oversight, coordination with state regulators, and the regulatory approach to algorithmic stablecoins. The bill also faces criticism. Figures like Senator Elizabeth Warren expressed concerns that it could benefit specific interests and weaken consumer protection and national defense. Congresswoman Maxine Waters has also vocally criticized activities in the crypto industry, and her criticism could potentially pose challenges to the bill's passage in the House. As of June 18, 16:09 UTC, USDD (USDD) was trading at $1, with a 0.007% change, and USDC (USDC) was trading at $1, also with a 0.007% change. Dai (DAI) was trading at $1, with a 0.013% change.