US crypto bills compared: STABLE Act vs GENIUS Act

Key takeaways

• Both the STABLE Act and GENIUS Act maintain federal and state pathways for stablecoin issuance.
• The STABLE Act and the GENIUS Act permit issuance by depository institutions, approved nonbanks, and state-qualified entities.
• Both bills mandate 1:1 reserve backing and monthly reserve disclosures.
• 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. 

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. 

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 the dollar’s 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.

Key features:

• Who can issue: Bank subsidiaries, nonbank subsidiaries, or state-qualified issuers can issue stablecoins.
• 1:1 reserve backing: Must be backed by high-quality liquid assets like US dollars, short-term Treasurys, or bank deposits.
• Monthly reporting: Issuers must publish monthly reserve disclosures, examined by independent accounting firms.
• No misrepresentation: Stablecoins cannot claim FDIC insurance and must disclose they are not government-backed.
• Enforcement: Civil penalties for violations reach $100K/day; false reserve claims can carry criminal penalties. 
• Anti-Money Laundering: Stablecoin issuers are subject to the Bank Secrecy Act and Sanctions compliance obligations. 

Did you know? Stablecoins under the STABLE Act must prohibit paying interest to holders, further distinguishing them from traditional savings tools.

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 strict 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.

Rules for payment stablecoins under the STABLE Act 

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 US dollars, short-term Treasurys, or bank deposits. 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 the 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.

Rules for Payment Stablecoins Under the GENIUS Act

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 the 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) regulations aim to bring clarity and oversight to the evolving world of stablecoins. Still, they differ significantly in scope, enforcement and regulatory philosophy.

The STABLE Act and the GENIUS Act do not require stablecoin issuers to obtain federal banking charters. Instead, it permits issuance by insured depository institutions (IDIs), federally approved nonbanks, and certified state-qualified issuers. The Acts explicitly prohibit stablecoins from claiming FDIC insurance and mandate full 1:1 reserve backing with approved high-quality liquid assets. These bills require AML/BSA compliance. In the GENIUS Act, issuers under $10 billion in market cap may remain state-regulated; those above must register federally. It emphasizes consumer protection, transparency, and systemic stability.

Meanwhile, MiCA, implemented across the European Union, offers a comprehensive, pan-EU framework that covers all crypto-assets, including stablecoins. It requires stablecoin issuers –  especially those with significant market activity – to maintain adequate capital reserves, comply with transparency and disclosure standards, and register with relevant EU regulators. 

The European Insurance and Occupational Pensions Authority (EIOPA) has separately proposed stringent capital requirements for insurers holding crypto assets, including stablecoins. The proposal mandates a 100% capital charge, effectively treating these holdings as valueless for solvency calculations, addressing concerns over volatility, manipulation, and liquidity risk. This reflects the EU’s cautious stance, prioritizing financial stability and policyholder protection.

Overall, MiCA offers a unified compliance path across the EU, while current US regulation remains fragmented.

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, there is broad support for stablecoin legislation. However, some have criticized certain provisions in the bill, specifically the prohibition on interest-bearing stablecoins.  

Some critics argue that stablecoins may depeg and need a bailout financed by the American taxpayers

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.

GENIUS ACT faces setbacks amid regulatory uncertainty

Here’s why the bill received pushback from Democrats:

• Loss of bipartisan support: Despite revisions aimed at tightening AML and consumer protections, nine Democrats who initially supported the GENIUS Act have withdrawn, citing unresolved issues. The shift signals growing concerns about the bill's current scope and impact.
• Foreign issuer ambiguity: Critics worry that the carve-outs for foreign stablecoin issuers may create enforcement gaps or unfair regulatory arbitrage, despite the conditions added in the new draft.
• Governance shift concerns: The replacement of Treasury oversight with a “Stablecoin Certification Review Committee” has raised questions about accountability, efficiency and potential fragmentation of federal oversight.
• Failed Senate vote: The Senate’s inability to reach cloture (48-49 vote) underscores partisan divisions and suggests the legislation lacks the consensus needed for timely passage.

Also, a scheduled joint House hearing collapsed due to objections from Democrats, turning into rival roundtables. This partisan friction points to unresolved tensions around crypto regulation and perceived conflicts of interest within the administration.

With Senate cloture failing and no agreement on combining the GENIUS and market structure bills, there’s concern that crypto legislation may stall before the August recess.

While the GENIUS Act is seen by some as a strategic step forward, others caution that it may unintentionally concentrate power in the hands of larger financial institutions and stifle smaller players in the ecosystem.