The Senate passed the “Genius Act” last week in a 68-30 vote, to the delight of the crypto industry. It still has to clear the House – where it’s known as the “Stable Act” – before becoming law, but lawmakers in the House say they want to act quickly.

The Senate’s approval is viewed as a win for U.S. based stablecoin issuers – for at least a few reasons:

– It provides clarity on which entities are permitted to issue payment stablecoins and how they’ll be regulated.

– It amends the definition of “security” in the Securities Act, the Exchange Act, and certain other statutes to exclude a payment stablecoin issued by a permitted payment stablecoin issuer as defined in the statute.

– It prohibits federal banking agencies, the NCUA, and the SEC from requiring financial entities to report custodial digital assets as liabilities.

– It establishes guardrails that stablecoin companies outside of the U.S. aren’t prepared to comply with.

This Troutman Pepper memo summarizes how the regulation would work – and this WSJ article explains some of the industry dynamics. This Arnold & Porter memo explains how the reconciliation process could play out:

Differences remain, however, including regarding the breadth of federal preemption, transaction monitoring processes and know-your-customer requirements, and the need for consumer protections. The political will to make law governing stablecoins suggests that the differences between the two bills are surmountable.

No word yet on whether this legislation will ultimately be named the “Stable Genius Act.” The Senate’s version says that existing ethics rules prohibit any member of Congress or senior executive branch official from issuing a payment stablecoin during their time in public service.

– Liz Dunshee