Washington, D.C. - In a major step toward regulating the fast-evolving cryptocurrency landscape, the United States Senate on Tuesday night passed a bill aimed at establishing clear rules for stablecoins—digital currencies tied to traditional assets like the US dollar.

The bill, officially named the GENIUS Act, was passed with a decisive 68–30 vote, signaling strong bipartisan support. It marks the first major federal effort to bring oversight to stablecoins, which are widely considered to be among the most secure and less volatile forms of cryptocurrency due to their backing by real-world assets.

Under the new legislation, stablecoin issuers will be required to maintain liquid reserves equivalent to the value of their tokens in circulation. These reserves must be composed of highly reliable assets such as cash, short-term Treasury securities, and bank deposits—an effort aimed at shoring up public confidence and preventing the kind of collapse that shook the market in 2022.

That year, the so-called “algorithmic” stablecoin TerraUSD, created by crypto startup Terraform Labs, lost its value when mass withdrawals exposed the vulnerability of a system not backed by tangible assets. The incident caused widespread turmoil in the digital asset space and served as a wake-up call for regulators.

Another key provision of the GENIUS Act gives US banking regulators formal authority to oversee stablecoin operations, further integrating the digital asset space with traditional financial oversight systems.

Analysts say this legislation could enhance the appeal of dollar-backed stablecoins globally—especially in regions grappling with unstable local currencies—by positioning them as safe digital alternatives for trade and investment.

The bill now moves to the House of Representatives, where its future remains uncertain. However, a separate piece of legislation—the STABLE Act—is also under consideration in the House. Lawmakers may choose to merge both proposals through a reconciliation process in Congress.

As the debate continues, the outcome will have global implications, especially for developing economies watching closely how the world's largest economy handles the regulation of digital money.


By WafricNews Desk.