CED Newsletters & Policy Alerts

Policy Alert: Stablecoin Bill Fails Key Senate Vote

May 15, 2025

Action: Legislation (S. 1582, the GENIUS Act) that would establish a regulatory regime for stablecoin issuers failed on May 12 to gain the 60 votes in the Senate needed to proceed toward final passage, leaving prospects for regulation of stablecoins uncertain. A similar House bill (H.R. 2392, the STABLE Act) was approved by the House Financial Services Committee in April, largely along party lines.

Key Insights

• While the GENIUS Act had earlier received bipartisan support, Democrats have increasingly expressed concerns about potential conflicts of interest stemming from the Trump family’s growing involvement in crypto markets. For example, World Liberty Financial, a crypto firm 60% owned by a Trump company, recently announced plans to launch its own stablecoin. Democrats opposing the bill stated that a provision should be added to prohibit elected officials and their families from owning, controlling, or promoting stablecoin business ventures.
• Stablecoin regulation has been the subject of years-long negotiations, previously primarily led by House Financial Services Committee ranking member Maxine Waters (D-CA) and former chairman Patrick McHenry (R-NC). Lawmakers have sought to resolve key policy differences, including the respective roles of state and Federal regulators, which Federal regulator would lead oversight of nonbank issuers, the composition of reserve assets, and other concerns.
• While Reps. Waters and McHenry had not released a public version of a compromise bill in the last Congress, Rep. Waters released a version in February 2025 that she says had been agreed to by each member’s staff before Rep. McHenry left office. Rep. Waters has stated her view that the McHenry-Waters bill would provide the “best foundation for moving forward.”
• The GENIUS Act differs materially from the McHenry-Waters bill in several ways. First, it assigns supervisory authority for nonbank stablecoin issuers to the Office of the Comptroller of the Currency instead of the Federal Reserve Board, perhaps reflecting Republican concerns about granting additional regulatory authority to the Board. In addition, unlike McHenry-Waters, which required all reserves held as deposits to be within FDIC-insured limits, the GENIUS Act allows deposits to exceed FDIC limits, addressing a major concern that the limitation would have restricted issuers’ ability to effectively manage cash flow and redemptions.
• The GENIUS Act also limits federal regulatory involvement in overseeing state-licensed issuers with less than $10 billion in issuance. Unlike the McHenry-Waters proposal – which would have subjected all state-licensed issuers to coordinated supervision by both state regulators and the Board – the GENIUS Act permits these smaller issuers to operate under a state regulatory regime, provided it is “substantially similar” to the Federal framework. The Act directs the Treasury Secretary to issue rules outlining the principles for determining what qualifies as “substantially similar.”
• Importantly, neither McHenry-Waters nor the GENIUS Act would prevent stablecoin issuers from paying interest to coin holders, raising the potential that stablecoin issuers could, in effect, function as “narrow banks” and compete for bank deposits. 
• Though the STABLE Act and GENIUS Act are largely similar, they differ in their treatment of foreign stablecoin issuers and the ability of stablecoin issuers to remain under state regulation. It is unclear how those differences would be resolved in negotiations.