Crypto-Focused Congress Drops Two New Stablecoin Bills

Last week, both chambers of Congress presented drafts of legislation intent on regulating payment stablecoins. The GENIUS Act, presented by Sens. Tim Scott, Bill Hagerty, Cynthia Lummis and Kirsten Gillibrand, arrived on February 4, 2025. Reps. French Hill and Bryan Steil introduced its counterpart in the House, the STABLE Act, two days later. 

Each piece of legislation would establish a regulatory framework for issuing stablecoins in the United States. Notably, many of the stablecoin-specific requirements mirror the guidance published by the New York State Department of Financial Services in June 2022. While there are plenty of similarities between the two bills, there are substantial differences that, depending on which is enacted (if either), could have significant implications for market participants.

Key similarities between the bills include:

• Giving issuers the choice between a federal or state licensing option (we recently wrote on the varying approaches taken by states on stablecoin policy).
• Requiring a reserve with an aggregate value at least equal to the amount of the stablecoins in circulation and enumerate a list of asset classes that issuers may hold in that reserve.
• Mandating that issuers publish monthly attestations performed by an independent auditor confirming the adequacy of the reserves.
• Limiting issuers to a set of business activities they may conduct if authorized for stablecoins. 
• Creating mechanisms where the federal government may step in and enforce against a state-qualified issuer that isn’t being adequately overseen by their state.
• Establishing the Office of the Comptroller of the Currency (OCC) as the regulator for non-bank issuers seeking authorization at the federal level.
• Clarifying that payment stablecoins are not securities.
• Providing a safe harbor for issuers that promptly submit their application to the appropriate regulator for consideration.

The bills also differ in important ways. Broadly speaking, the GENIUS Act is lengthier; it allows for more asset classes in the reserve, places more restrictions on the state option and considers treatment of holdings in insolvency. More specifically:

• The GENIUS Act allows for select reverse repurchase agreements and government money market funds for inclusion in the reserve. The STABLE Act does not.
• The GENIUS Act places a $10 billion cap on state-qualified issuers before needing to transfer to federal oversight, unless the appropriate federal regulator waives the requirement for a particular issuer. The STABLE Act contains no cap on state-qualified issuance.
• The GENIUS Act includes an annual certification process for states to complete with the secretary of the Department of the Treasury. The secretary then confirms each state framework is “substantially similar” to the requirements of the bill. The STABLE Act does not have this check on states.
• The GENIUS Act contains a provision granting priority to stablecoin holders over all other claims if an issuer becomes insolvent. The STABLE Act does not discuss insolvency.
• The GENIUS Act allows states to engage in memoranda of understanding and information sharing with the Board of Governors of the Federal Reserve. The STABLE Act allows the same but with the OCC as well.
• The STABLE Act limits stablecoin issuers to an exhaustive list of activities. The GENIUS Act contains the same list but qualifies the limitation with additional activities expressly permitted by the applicable regulator.

Ultimately, both bills still need to undergo the arduous process of being passed by both chambers then signed by the president. It is unclear at this point which version of each portion of the bills will prevail, or if the differences will resolve in some middle ground.

Whichever version of the legislation gets codified, if either, there is still a long way to go. Many provisions require implementation by rulemaking and by regulators operating jointly. The earlier of 18 months following enactment or 120 days following promulgation of rules will determine the effective date in either case (unless this is modified at some later time).

As new versions surface, we at Paul Hastings will monitor for important changes and keep our clients informed of developments. For more on crypto policy, visit our tracker here.