Investing.com -- The U.S. Senate voted 66-32 on Monday to advance the GENIUS Act, a landmark stablecoin regulation bill that has rapidly gained bipartisan momentum. The vote sets up a final vote as early as next week, with the bill then expected to move to the House of Representatives.
The GENIUS Act sets regulatory standards for stablecoins, requiring issuers to back their tokens with reserves of assets like U.S. dollars or Treasuries to reduce volatility and protect consumers.
It also mandates priority repayment for coin holders in bankruptcy and enforces anti-money laundering and anti-terrorism compliance.
While a presidential signature is still weeks away, Deutsche Bank has released its assessment of the bill’s implications for markets, technology, and the dollar.
1) ‘Stablecoin legislation cements USD supremacy:’ The GENIUS Act requires all stablecoins to be fully backed by low-risk liquid assets such as short-dated U.S. Treasuries, insured bank deposits, or physical dollars. Monthly reserve disclosures will be mandatory.
This framework enshrines practices already adopted by major players like Tether, whose USD-pegged coins represent over 61% of the stablecoin market cap.
According to Deutsche Bank analysts, the regulation “formalizes stablecoin issuers’ role as quasi money market funds,” deepening their integration into the U.S. financial system.
2) ‘Big Tech’s stablecoin ambitions are curtailed:’ Revisions to the bill block tech giants like Meta (NASDAQ:META), Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) from issuing stablecoins unless they meet strict criteria on financial risk, data privacy and fair conduct.
Lawmakers have cited concerns that tech monopolies could use their vast ecosystems to dominate financial infrastructure, echoing the backlash that derailed Meta’s Libra in 2019.
“It underscores Congress’s preference for payment-focused fintechs over platform giants when it comes to monetary innovation,” analysts Marion Laboure and Camilla Siazon explained.
“The government appears keen to preserve USD dominance—especially as a tool to shore up U.S. debt—while curtailing any threat to its primacy from private tech monopolies,” they added.
3) ‘Tether’s ambitions are also checked:’ Foreign issuers, particularly Tether, will now face tighter oversight.
A new “Stablecoin Certification Review Committee” along with the Treasury Secretary will have authority to regulate offshore providers.
According to Deutsche’s team, this addresses a prior loophole that allowed foreign issuers to operate with fewer constraints, provided they could restrict transfers when requested by law enforcement.
“Tether and other offshore issuers will now be subject to the same regulatory framework as U.S.-based stablecoin providers,” the bank notes.
4) ‘No yield-bearing stablecoins – but the market is growing:’ The GENIUS Act bans interest or yield payments on regulated stablecoins.
That limitation may steer investors toward tokenized money market funds. Still, interest-bearing coins are gaining traction, with Deutsche Bank noting they already account for 2.8% of the $247 billion stablecoin space.
5) ‘Political conflicts of interest cloud the legislative push:’ The bill has not escaped controversy. President Trump’s links to crypto, including the World Liberty Financial’s rapidly growing USD1 stablecoin, have drawn criticism.
Senator Elizabeth Warren said the bill “would turbocharge Trump’s corruption,” warning it could enable “anonymous foreign intermediaries” to funnel funds to his network. Since late April, USD1 has surged from $128 million to over $2 billion in market cap.