Stablecoin legislation pushed as Trump sets crypto-friendly agenda
Senator Bill Hagerty will introduce legislation Tuesday to create a framework for stablecoins, the latest push among Republicans to create crypto-friendly guidelines for an industry that’s a priority for President Donald Trump.
The bill seeks to create a predictable regulatory environment for stablecoins, cryptocurrencies marketed as being less volatile than other tokens because their value is pegged to the U.S. dollar or other stable assets. Proponents say that federal regulation would lend legitimacy to the asset class that could lead to broader adoption.
“My legislation establishes a safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto,” Hagerty, a Tennessee Republican, said in a statement.
Sens. Kirsten Gillibrand, a New York Democrat, and Tim Scott of South Carolina and Cynthia Lummis of Wyoming, both Republicans, are co-sponsoring the bill.
The legislation dubbed the Guiding and Establishing National Innovation for U.S. Stablecoins – or GENIUS Act – outlines rules for issuing stablecoin payments and requirements to back stablecoin payments with U.S. currency, Federal Reserve notes, Treasury bills and other assets, according to a draft of the bill seen by Bloomberg. Stablecoins often serve as the bridge between crypto and the traditional financial system.
The stablecoin market reached a market value of $205 billion by the end of 2024 and is largely dominated by cryptocurrency firm Tether Holdings Ltd. Incoming Commerce Secretary Howard Lutnick’s firm Cantor Fitzgerald holds a stake in Tether.
The legislation would also require stablecoin issuers to disclose audited reports each month about the reserves that back the stablecoins. Submitting false reports would trigger criminal penalties.
The quality of assets backing stablecoins like Tether’s USDT token has come under intense scrutiny in recent years, as regulators grew concerned about the liquidity of operators’ reserves and if they could withstand mass redemption requests while under market pressure.
Nonbank stablecoin issuers would be regulated and supervised by the Office of the Comptroller of the Currency, an independent bureau within the Treasury Department.
Trump has vowed to bolster the crypto industry by easing regulatory constraints and elevating crypto-friendly regulators. His commitment to the industry marks a change for a president who was previously skeptical about digital assets but embraced them during the 2024 election as crypto executives donated to his campaign.
Last month, Trump signed an executive action that specifically called for “the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.”
He also called to block any further work on a central bank digital currency, which has been seen as a potential competitor to stablecoins. While the order created a working group to recommend a regulatory framework for digital assets, the actual policy change would have to be approved by Congress. Both Democrats and Republicans have expressed interest in addressing stablecoin regulation.
Trump’s approach marks an abrupt shift from former President Joe Biden, whose administration was largely skeptical of digital assets and prioritized investigations and enforcement actions over creating regulatory guidelines.