Senate Advances Stablecoin Bill as Tether Joins Top Treasury Holders

US lawmakers are accelerating efforts to bring stablecoin regulation under federal oversight as the Senate advances the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. The bill, which sets licensing, collateralization, and compliance standards for stablecoin issuers, passed a key procedural vote with bipartisan support after facing delays tied to political concerns. As debate over crypto legislation intensifies in Washington, Tether, the issuer of the world’s largest stablecoin, has quietly expanded its traditional asset holdings, surpassing Germany in US Treasury investments with over $120 billion. US Senate Advances GENIUS Stablecoin Bill Despite Democrat Concerns Over Trump’s Crypto Empire The United States Senate has taken a pivotal step toward comprehensive regulation of the stablecoin market, advancing the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act) in a 66–32 procedural vote. The vote sets the stage for formal debate on the Senate floor, potentially positioning the bill for final passage as early as Memorial Day, May 26. While the legislation represents a bipartisan breakthrough on stablecoin oversight, its trajectory has been clouded by intense political friction over President Donald Trump’s growing footprint in the cryptocurrency space. The GENIUS Act is designed to introduce clear regulatory standards for the burgeoning $250 billion stablecoin market, which is currently dominated by offshore giants like Tether’s USDT and domestic players such as Circle’s USDC. Introduced by Republican Senator Bill Hagerty on Feb. 4, the bill requires that all stablecoins: Be fully backed by reserves (not algorithmic), Undergo regular third-party security and reserve audits, Be issued only by licensed entities approved by federal or state regulators. The act also explicitly bans algorithmic stablecoins , a move that reflects lingering regulatory concerns after the spectacular 2022 collapse of Terra’s UST stablecoin. Democrat Opposition Eases — With Caveats Earlier attempts to move the bill forward were derailed on May 8, when a bloc of Democratic senators blocked cloture due to unresolved concerns around potential conflicts of interest linked to Donald Trump’s personal and family cryptocurrency ventures. However, key Democrats, including Senators Mark Warner, Adam Schiff, and Ruben Gallego, reversed course and supported the motion to debate, acknowledging the urgency of setting regulatory standards. “Blockchain technology is here to stay,” Warner said in a post-vote statement. “We cannot allow that corruption to blind us to the broader reality. If American lawmakers don’t shape this ecosystem, other regimes will — and not in ways that reflect democratic values.” Despite their shift in tone, Democratic lawmakers made it clear that they expect stricter oversight to be added in the amendment process, particularly around Anti-Money Laundering (AML) and Know-Your-Customer (KYC) provisions. Still, not all Democrats are convinced. Senator Elizabeth Warren, a prominent voice for tougher crypto regulation, remained firmly opposed to the bill, criticizing it for failing to curtail what she called Trump’s “blatant crypto corruption.” In a fiery floor speech ahead of the vote, Warren accused Trump and his family of attempting to “institutionalize” their crypto empire through legislation. “Trump and his family have already pocketed hundreds of millions from crypto,” she said, referencing Trump’s new USD1 stablecoin, which has reportedly become the seventh-largest stablecoin by market cap according to CoinGecko. “If this bill passes in its current form, they’ll make hundreds of millions more.” Largest stablecoins by market cap (Source: CoinGecko ) Warren’s remarks come amid widespread media coverage of Trump’s rapidly expanding crypto ventures, including: A meme coin ecosystem tied to the Trump brand, A new crypto mining company planning a public listing, A Trump-branded crypto platform, And the USD1 stablecoin, which has seen a meteoric rise in adoption and trading volume. Cynthia Lummis Targets Memorial Day Passage Senator Cynthia Lummis (R-WY), one of the co-sponsors of the GENIUS Act and a long-time crypto advocate, said she believes the bill can be passed by Memorial Day, signaling urgency as the US races to establish legal clarity before foreign frameworks take precedence. The Senate’s decision to move forward on the GENIUS Act marks a rare bipartisan win in a deeply polarized political environment. But the involvement of Trump’s crypto business interests has complicated the narrative, turning a financial policy debate into a referendum on political ethics. Several Democrats indicated that amendments addressing ethical oversight and potential financial disclosures related to political figures and crypto companies will be tabled in the next phase. With the bill now headed for full Senate debate, the next week will be crucial. Lawmakers are expected to hash out potential amendments addressing: Conflicts of interest, Political beneficiary disclosures, More stringent AML/KYC requirements, Issuer transparency obligations, Guardrails against market manipulation. If the GENIUS Act survives the Senate in its current or amended form, it will head to the House of Representatives for final reconciliation, likely merging with the Clarity for Payment Stablecoins Act, championed by former Representative Patrick McHenry. A Global Race for Stablecoin Leadership The GENIUS Act comes as stablecoins increasingly emerge as the backbone of the digital financial system. With countries like Japan, the UK, and the EU launching or regulating fiat-pegged digital currencies, the US is under mounting pressure to deliver its own rules of the road. A growing number of central banks and policymakers now recognize that stablecoins could either reinforce the dollar’s global dominance or, if left unchecked, open the door for foreign-controlled digital assets to bypass traditional financial oversight. Tether Surpasses Germany in US Treasury Holdings, Cementing Role as Global Dollar Liquidity Distributor In other stablecoin news, Tether, the issuer of the world’s largest stablecoin USD₮ (USDT), has officially surpassed Germany in holdings of United States Treasury bills. According to data published by the US Department of the Treasury and confirmed in Tether’s Q1 2025 attestation report, the stablecoin giant now holds over $120 billion in US Treasurys, compared to Germany’s $111.4 billion. This vaults Tether into the 19th position globally among all countries and sovereign wealth entities in terms of US government debt ownership, ahead of nations like Canada, Mexico, Taiwan, and Norway. From Crypto Issuer to Global Bondholder Tether’s evolution from a crypto startup to a heavyweight in global finance has stunned skeptics and analysts alike. What began as a niche stablecoin issuer in 2014 has now become a central liquidity distributor for the US dollar, with significant influence not only in digital markets but in global monetary flows. “This milestone not only reinforces the company’s conservative reserve management strategy,” Tether stated in its Q1 report, “but also highlights Tether’s growing role in distributing dollar-denominated liquidity at scale.” Tether was the 7th largest US Treasuries holder in 2024 (Source: X ) Tether’s holdings are primarily in short-dated US Treasury bills, one of the safest and most liquid financial instruments in the world. These holdings serve as the backing reserves for its $151 billion supply of USD₮, helping to maintain its peg to the US dollar and instill confidence in users. The attestation report, which details the firm’s asset mix and profits for Q1 2025, revealed that Tether generated over $1 billion in operating profit during the first three months of the year. The firm credited this performance to strong returns from its Treasury holdings and its gold reserves, both of which helped offset turbulence in crypto markets. Gold in particular was cited as a key stabilizing factor. While Bitcoin and other cryptocurrencies suffered pullbacks during Q1, gold’s performance in Tether’s portfolio “almost offset” the downturn, the report noted. Global Implications of Tether’s T-Bill Holdings Tether’s rise into the ranks of top US Treasury holders also has geopolitical implications. As stablecoins grow in cross-border adoption, particularly in emerging markets where inflation is rampant, Tether’s USD₮ often acts as a proxy for the dollar itself, enabling users to bypass capital controls and currency instability. Looking ahead, Tether is expected to continue building its traditional asset portfolio, while exploring expansion into tokenized government securities, private lending, and even central bank partnerships in frontier markets. Its Q1 report hints at ongoing dialogue with several jurisdictions interested in using stablecoins for real-time settlement and international remittances. Meanwhile, market analysts say that the firm’s transparency practices remain under intense scrutiny. While Tether has improved its reporting and introduced quarterly attestations, critics argue that nothing short of a full audit by a Big Four accounting firm will suffice to satisfy regulators and institutional investors.

Source: Coinpaper