Some changes in the GENIUS bill are believed to help Tether achieve legal legitimacy and expand its operations in the U.S. However, hopes for the GENIUS bill's passage have diminished as it recently failed in the Senate.
The GENIUS Act (the Guiding and Establishing National Innovation for Stablecoins Act of 2025) did not pass the cloture procedure in the Senate, causing great disappointment for many supporters and slowing down the process of establishing a legal framework for digital assets in the U.S.
The bill was initiated by Senator Bill Hagerty and co-sponsored by Tim Scott, Kirsten Gillibrand, Cynthia Lummis, and Angela Alsobrooks. The GENIUS Act requires:
Stablecoins are backed 100% by USD or equivalent liquid assets.
Conduct annual audits for stablecoins with a market capitalization over $50 billion.
Prohibit the issuance of foreign stablecoins in the U.S., while still allowing circulation in the secondary market.
Empower the Treasury to take action against foreign stablecoin issuers.
Although the bill has been amended to include stricter provisions on anti-money laundering (AML) and the responsibilities of stablecoin issuers, it is still fiercely opposed by the Democratic Party. Senators are concerned that the GENIUS Act will increase the link between politics and crypto, thereby creating unintended effects on the U.S. financial system.
Although it did not pass the cloture procedure in the Senate, the bill is likely to continue being discussed among lawmakers.
Upon further investigation, legal experts believe that the GENIUS bill contains many regulations that will benefit the world's largest stablecoin issuer, Tether.
Foreign issuers will also be held accountable
The new GENIUS bill adds the concept of "extraterritorial jurisdiction," meaning that if a stablecoin issuer is outside the United States but targets American customers, they must still comply with these stablecoin regulations.
This provision will end Tether's ambiguous regulatory status and is expected to benefit the world's largest stablecoin issuer.
Definition of digital asset service provider
The new definition will be expanded to include parts of the cryptocurrency ecosystem such as developers, validator nodes, and self-custody wallet providers.
Digital asset service providers will now be held responsible if they use unauthorized stablecoins (stablecoins not issued by a recognized entity, such as decentralized stablecoins).
Safety authority
The bill grants the Secretary of the Treasury limited safety authority to provide flexibility in managing small or experimental projects, but also allows the regulatory agency to act unilaterally in "emergency situations."#TetherUpdate