Key takeaways
- The STABLE Act prioritizes strict federal control, while the GENIUS Act supports a dual regulatory regime that includes state and federal oversight.
- The STABLE Act limits issuance to insured depository institutions and federally approved nonbanks, while the GENIUS Act allows a broader pool of issuers.
- Both bills mandate 1:1 reserve backing and monthly reserve disclosures, but the STABLE Act requires FDIC insurance and imposes stricter penalties for false reporting.
- The STABLE Act introduces a two-year ban on algorithmic stablecoins, while the GENIUS Act allows them conditionally.
As the US moves to regulate the stablecoin sector, two key legislative proposals have taken center stage: the STABLE Act and the GENIUS Act. Each bill offers a distinct approach to governing payment stablecoins, reflecting different priorities around consumer protection, financial stability and innovation.
While the STABLE Act emphasizes strict federal oversight, the GENIUS Act seeks a more flexible path that includes state and federal regulation.
This article breaks down the differences between the two bills, helping readers understand how they may shape the future of stablecoins in the US and beyond.
What is the STABLE Act
The Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, introduced as a draft by US Representatives French Hill and Bryan Steil, proposes a regulatory framework for dollar-pegged payment stablecoins in the US. The term “payment stablecoins” refers to fiat-pegged cryptocurrencies recorded on a public ledger.
A key feature of the STABLE Act is a two-year moratorium on issuing collateralized stablecoins backed by self-issued digital assets. The bill was reportedly drafted with the help of Tether, the world’s largest issuer of stablecoins.
Hill emphasized that the legislation aims to clarify rules for payment stablecoins and create a clear federal path for issuers. The draft follows efforts by the Trump administration to bring stablecoins onshore and strengthen the US dollar’s global dominance. President Donald Trump’s crypto policy lead, David Sacks, described stablecoins as tools to extend dollar influence internationally.
Lawmakers argue that a strong regulatory framework will encourage innovation while protecting consumers and investors. The STABLE Act is seen as a step toward reinforcing the dollar’s role as the world’s reserve currency.
On April 3, 2025, the House Financial Services Committee passed the bill, which will now head to the House floor for a full vote.
Did you know? The STABLE Act mandates that stablecoin reserves be held separately from business funds. This means issuers can’t use customer deposits for operations, adding a critical layer of protection.
What is the GENIUS Act
On Feb. 4, 2025, Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand and Cynthia Lummis introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act in the Senate to create a legal structure for stablecoin payments. On March 17, 2025, the Senate Banking Committee passed a revised version with an 18-6 bipartisan vote, advancing it toward law.
The bill aims to boost US-based stablecoin issuers, reinforcing the dollar’s global dominance. It includes stricter rules like enhanced Anti-Money Laundering (AML) safeguards, reserve and liquidity standards and sanctions checks. Stablecoin issuers would fall under the Bank Secrecy Act as financial entities, with issuance restricted to approved parties.
US federal and state laws regulate different aspects of the stablecoin industry as of April 10, 2025, based on activity type and stablecoin characteristics.
Did you know? The GENIUS Act classifies stablecoin issuers as financial institutions under the Bank Secrecy Act, making them subject to AML rules, user verification and suspicious activity reporting.
What the STABLE Act covers
The STABLE Act creates a structured path for the regulation of payment stablecoins while fostering innovation and protecting users:
- Definition and scope: The act defines a payment stablecoin as a digital asset used for payments or settlements. It is redeemable at a fixed monetary value. The bill distinguishes these tokens from other crypto assets to minimize regulatory confusion and investor risk.
- Licensing: Only permitted payment stablecoin issuers can legally issue stablecoins. These include subsidiaries of insured depository institutions, federally approved nonbank entities and issuers licensed under state law.
- Reserve requirements: Issuers must fully back stablecoins they issue with approved liquid assets like fiat, short-term US Treasurys or central bank reserves. These reserves must be kept separate from business funds, helping ensure customers can redeem stablecoins at full face value, even during financial stress.
- Transparency: Issuers must publish the composition of reserves they hold and their redemption policies every month. These disclosures are audited by a registered public accounting firm, and top executives must certify the declaration. For false reporting, there are penalties under 18 US Code § 1350(c), which is part of the Sarbanes-Oxley Act. If false reporting is willful, fines could be up to $5 million and/or imprisonment up to 20 years.
- Regulatory flexibility: Regulators must review applications within specific timelines. They can reject applications only if safety and soundness requirements are not met. This creates regulatory flexibility while ensuring rigorous checks.
- AML compliance: Under the STABLE Act, issuers must comply with the Bank Secrecy Act and related AML regulations. They must conduct customer due diligence, monitor transactions and report suspicious activity, ensuring stablecoins don’t become tools for illicit finance.
- Supervision and enforcement: Federal regulators can supervise and investigate stablecoin issuers, suspend their operations for violations and impose civil penalties of up to $100,000 per day. Regulators can undertake cease-and-desist actions and even remove executives if misconduct threatens financial integrity or consumer safety.
- Consumer protection: The act mandates strict asset segregation to protect customer funds. In case an issuer becomes insolvent, customers are prioritized over other creditors. This ensures users don’t lose access to their funds and encourages safe custody practices by providers.
What the GENIUS Act covers
This act integrates digital assets into the US financial system through a unified regulatory structure. Here are the key provisions of the bill:
- Definition of payment stablecoin: The GENIUS Act defines a payment stablecoin as a digital asset used for payments or settlements. It is tied to a fixed value, like the US dollar, and is fully backed on a 1:1 basis by fiat currency or other approved liquid assets.
- Licensing and oversight: The bill requires issuers of stablecoins to register with either state or federal regulators. Those over $10 billion in market value must register federally, while smaller issuers can work with states. The purpose of this provision is to keep a strict vigil on the issuers while providing them the flexibility to innovate.
- Reserve requirements: Issuers must back every stablecoin with high-quality liquid assets like cash or US Treasury bills. These reserves must be kept separate from business funds and certified monthly to establish full backing of the stablecoins in circulation.
- Transparency: Issuers must openly share their reserve details and redemption processes. Regular audits by certified accounting firms will confirm these disclosures.
- AML compliance: The bill considers issuers as financial institutions that must follow AML rules. They need to verify users and report suspicious transactions to the authorities.
- Consumer protection: If a stablecoin issuer goes bankrupt, holders get paid before other creditors. This provision helps protect consumers’ interests.
- Regulatory clarity: The bill states that payment stablecoins are not securities, commodities or investment companies under federal law. It clarifies the legal position of stablecoins.
Key differences between STABLE and GENIUS Acts
Both legislative proposals – the STABLE Act and the GENIUS Act – offer different approaches to managing payment stablecoins. The table below provides a comparison of these two bills to highlight their key differences and priorities:
Potential impact of the STABLE Act and GENIUS Act
The STABLE Act establishes stringent federal oversight for USD-pegged stablecoins like USDC (USDC), Tether USDt (USDT) and PayPal USD (PYUSD). While this framework enhances consumer protection and may bolster trust, it imposes significant compliance costs, potentially disadvantaging smaller issuers.
Still, larger entities like Circle and PayPal may benefit from the clarity and legitimacy the act provides. In the long term, the legislation would lead to increased adoption and integration into traditional financial systems.
The GENIUS Act offers a dual regulatory approach, allowing stablecoin issuers to choose between state and federal oversight, which could encourage innovation and entry of new players. The act also calls for studies on algorithmic stablecoins, indicating a cautious approach to more complex digital assets.
While both acts aim to safeguard consumers and ensure financial stability, they also introduce regulatory burdens that could stifle innovation. The STABLE Act’s rigorous requirements may limit the agility of stablecoin projects, whereas the GENIUS Act’s more accommodating stance could foster growth but might raise concerns about adequate oversight. Striking a balance between regulation and innovation remains a central challenge in the evolving digital asset landscape.
How STABLE Act and GENIUS Act compare with MiCA
The STABLE Act, GENIUS Act and the EU’s Markets in Crypto-Assets (MiCA) regulation each aim to bring clarity and structure to the rapidly evolving world of stablecoins. Still, they differ in scope, enforcement and regulatory philosophy.
The STABLE Act adopts a strict, banking-centric approach. It requires stablecoin issuers to obtain federal banking charters, maintain FDIC-insured reserves and secure Federal Reserve approval. Its focus is primarily on consumer protection and financial stability. The GENIUS Act offers a more flexible model, allowing both state and federal licensing, and aims to encourage innovation while still imposing robust reserve and disclosure requirements.
MiCA, implemented across the European Union, provides a comprehensive framework covering all crypto-assets, including stablecoins. MiCA requires stablecoin issuers – especially those with significant usage – to maintain capital reserves, adhere to transparency rules and register with EU regulators. Unlike the STABLE Act, MiCA doesn't mandate a full banking license, offering a middle ground between the US bills.
The European Insurance and Occupational Pensions Authority (EIOPA) has proposed stringent capital rules for insurers owning crypto assets, including stablecoins. The proposal requires insurers to apply a 100% capital charge to such holdings, treating these assets as valueless in solvency calculations. This aims to address risks like big price swings, market manipulation and liquidity concerns. EIOPA's cautious approach prioritizes financial stability and policyholder safety.
Overall, MiCA’s pan-European scope and clear compliance timelines offer a unified path for crypto firms in the EU, whereas US legislation remains fragmented. The GENIUS Act aligns more closely with MiCA in terms of regulatory flexibility, while the STABLE Act reflects a more conservative, risk-averse stance
Did you know? MiCA, the EU’s crypto regulation framework, covers all crypto assets, including stablecoins, utility tokens and asset-referenced tokens (ARTs), offering a unified compliance structure across 27 EU nations.
Criticism of the STABLE Act
While the STABLE Act garners support for offering regulatory clarity and legitimizing stablecoins, it has drawn criticism across political, regulatory and industry lines.
Critics argue that the bill lacks sufficient consumer safeguards. Concerns focus on the absence of mandatory FDIC insurance or effective refund mechanisms in cases of issuer insolvency, fraud or depegging incidents. This could leave users exposed to losses without adequate recourse.
State regulators, especially the Conference of State Bank Supervisors, have pushed back against the bill’s federal preemption, warning that it could undermine the role of states in financial innovation and oversight. They emphasize the importance of maintaining a balance between federal and state authority in regulating digital assets.
Within the crypto industry, views are divided. Some appreciate the regulatory clarity, while others caution that overly restrictive provisions might hinder technological progress.
Some critics argue that stablecoins may depeg and need a bailout financed by the American taxpayers.
The global financial community is also concerned about the bill. Subtle price movements in stablecoins like USDC and Tether upon the bill’s release hint at investor uncertainty.
Internationally, there are fears that US dominance in stablecoin regulation could have ripple effects on other financial systems. As the STABLE Act approaches a House vote, the debate over innovation versus risk continues to grow.
Criticism of the GENIUS Act
While the GENIUS Act aims to bring clarity to payment stablecoin oversight, concerns persist about its potential impact on monetary policy, financial stability and the risk of enabling illicit finance.
Some analysts welcome the act’s dual licensing model, which balances federal oversight with recognition of state regulators. Critics argue that its licensing and reserve requirements may burden existing stablecoin issuers, particularly smaller or already operational platforms. They worry that this might hinder innovation or discourage market entry.
The banking sector remains split in opinion. Larger banks may benefit from the regulatory framework, while community banks fear competition from tech giants like Apple or Meta entering the stablecoin space, potentially leading to further market fragmentation.
Another criticism is the bill’s narrow domestic focus. Despite stablecoins’ potential to revolutionize cross-border payments, the legislation largely overlooks fintech developments in countries like Brazil and India, leaders in payment innovation. This inward-looking approach could limit the act’s efficacy in global financial integration.
While the GENIUS Act is seen by some as a strategic step forward, others caution it may unintentionally concentrate power in the hands of larger financial institutions and stifle smaller players in the ecosystem