Amidst the nail-biter, week-long drama over whether the Senate’s GENIUS Act is really dead or not, progress appears to have been made Thursday—with pro-crypto Democrats now touting concessions they’ve received from Republican colleagues in a new draft of the bill, which could see a vote by early next week.
Decrypt obtained a copy and reviewed this negotiated draft of the Senate’s stablecoin legislation. The bill indeed contains new language on issues such as national security protections, ethics, Big Tech, and foreign issuers. But it’s currently unclear if these measures will have enough teeth to make them enforceable.
The most high-profile issue plaguing negotiations over the bill has to do with the president himself, Donald Trump, and perceived crypto-related conflicts of interest. His family’s crypto firm, World Liberty Financial, launched its own stablecoin earlier this year, and recently announced a $2 billion deal related to the token with the UAE government. Democrats have insisted that Trump must not be permitted to issue stablecoins while in office.
In the bill’s new language, which Democrats touted as containing improved ethics considerations, the president and the vice president are still exempt from a rule barring all senior executive branch officials from issuing their own stablecoins. The new language does now, however, explicitly forbid executive special government employees—like Elon Musk and White House AI and crypto czar David Sacks—from offering such tokens.
Stablecoins are cryptocurrencies, typically pegged to the U.S. dollar, that allow users to enter and exit digital asset trades without accessing dollars directly. They also can be used to send remittances or payments overseas, and it is expected that once stablecoin legislation is signed into law, traditional banking firms will flood the sector—bringing billions, if not trillions of dollars, into crypto.
The GENIUS Act would establish a legal framework for issuing stablecoins in the United States. Another key sticking point in negotiations over the bill has been the prospect of tech titans like Apple, Meta, and Amazon launching their own stablecoins and using financial data from those tokens to target users and study their purchasing behavior. While the new draft of the GENIUS Act does include text targeting Big Tech for the first time, it may still fall short of its intended goal.
According to the bill’s latest draft, “a public company that is not predominantly engaged in 1 or more financial activities” (aka, a Big Tech firm) may only issue a stablecoin if an independent Stablecoin Certification Review Committee finds it will not pose a “material risk” to the U.S. banking system, and the company does not either use stablecoin transaction data to target customers or sell such data to third parties. Big Tech companies would still be fully entitled to use stablecoin transaction data however they want, and sell it to whoever they want, so long as they get customers’ consent in their terms of service.
A further concern about stablecoins, voiced by some Democrats, has been the possibility that such tokens might “de-peg” from their dollar valuations and collapse, spreading havoc through the American financial system. Exacerbating risk in such a scenario is the fact that stablecoins are not backed by the FDIC, so the U.S. government would make no guarantee to repay customers in the event of a bank run. The new GENIUS Act now contains language on insolvency, but makes no firm commitments on the subject.
Instead, the new bill mandates stablecoin regulators to conduct a study, due to Congress within three years of the GENIUS Act becoming law, examining what would happen if a stablecoin went insolvent, whether customers could be paid out, and whether changes would need to be made to bankruptcy laws and insolvency administration regimes to accommodate such a situation. There is no obligation placed on Congress to do anything with the study.
A major issue related to stablecoin bills pending in both chambers of Congress has been how these bills treat foreign issuers—namely Tether, the world’s largest stablecoin company, which is based in El Salvador. Previous drafts of the GENIUS Act have allowed stablecoins not registered in the United States to be offered stateside, so long as the countries these tokens are issued from have laws comparable to the GENIUS Act on the books. Democrats have complained such requirements do not adequately address their concerns about stablecoins like Tether, which, they say, has been used much too frequently to facilitate money laundering and sanctions evasion.
The new and improved GENIUS Act contains language on such issues, but leaves discretion on the question up to the U.S. Treasury Secretary, Scott Bessent. For example, foreign nations with comparable stablecoins regimes cannot now be jurisdictions of “primary money laundering concern”—a determination left to the Treasury Secretary.
These nations also must now have in place “adequate anti-money laundering and counter-financing of terrorism program[s] and sanction compliance standards,” as determined by the Secretary. As a political appointee serving at the pleasure of the president, it’s unclear what determinations the Treasury Secretary would make in that arena. The government of El Salvador, where Tether is headquartered, has close ties to the Trump administration—which itself has ties to Tether.
It remains uncertain whether the GENIUS Act has regained support of key Democrats, many of whom have requested to review the new bill text before it is brought to a vote. But that the new text is circulating is a sign in itself that pro-crypto Democrats feel confident they’ve acquired enough concessions to press forward with a new floor vote on the legislation.
Crypto policy leaders anxiously fretted over the past week that Democrats might be able to use their newfound leverage to attract major concessions from Republicans over the bill’s sticking points. But with the emergence of this new text, those fears have all-but evaporated.
“I feel like I’m missing something,” one crypto industry leader who reviewed the new GENIUS Act told Decrypt. “Because it reads too good to be true.”
