GENIUS Act Momentum Meets Resistance as Congress Edges Closer to Market Structure Legislation

Two significant legislative efforts took center stage this week, offering a clearer view of where Congress may be heading on crypto regulation. A revised version of the GENIUS Act, legislation to establish a federal framework for stablecoins, was released with updates on anti-money laundering, consumer protection and custodial provisions. The new draft introduces a “Stablecoin Certification Review Committee” to determine whether state regulatory regimes meet federal standards, replacing authority previously vested in the Treasury Department, and sets conditions for foreign stablecoin issuers operating in the U.S. However, momentum stalled when the Senate failed to invoke cloture on the motion to proceed, with a 48-49 vote, falling short of the 60 votes required to advance the bill. Despite the failed vote, lawmakers from both parties have expressed continued interest in negotiating a path forward for stablecoin legislation in the coming weeks.

At the same time, the House Financial Services and Agriculture committees released a discussion draft of the market structure bill that builds upon the framework and concepts introduced in the FIT21 legislation passed by the House last Congress. The House Financial Services and Agriculture digital assets subcommittees were scheduled to convene a joint hearing to explore how oversight of digital assets should be divided between the SEC and CFTC. House Financial Services Ranking Member Maxine Waters (D-CA) objected to having the joint hearing, which requires unanimous consent from committee members. Because of the lack of unanimous consent, the formal “hearing” was transformed into a “roundtable.” Instead, Waters and other committee Democrats held a separate “shadow hearing” focused on potential conflicts of interest within the administration regarding digital assets. Meanwhile, the roundtable continued, with participants emphasizing the need to reduce regulatory overlap, clarify asset classification and develop a cohesive framework for both primary issuances and secondary market activity.

To advance stablecoin and market structure legislation, members of both the House and Senate will need to continue working across the aisle to reconcile their differing views. While disagreements remain, this kind of negotiation is a normal, and often necessary, part of the legislative process, sometimes referred to as the “sausage-making” of policymaking.

Legislative Updates

Updated Text of GENIUS Act Released, Some Democrats Reverse Support

• On May 1, the leading sponsor of the legislation Sen. Bill Hagerty (R-TN), Senate banking committee Chairman Tim Scott (R-SC) and digital assets subcommittee Chair Cynthia Lummis (R-WY) released an updated draft version of the GENIUS Act. The revised version includes revisions to its anti-money laundering, consumer protection and supervisory provisions. The release follows Senate Majority Leader John Thune’s (R-SD) move to fast-track the bill for a Senate vote, reportedly before Memorial Day.
• Summary of Bill. Highlights of the GENIUS Act include:
  • For issuers of more than $10 billion of stablecoins, the bill applies the Federal Reserve’s framework to depository institutions and the Office of the Comptroller of the Currency’s framework for nonbank issuers.
  • Issuers under the $10 billion threshold may continue operating under state regulatory regimes, with a waiver process available for larger issuers seeking to remain state-regulated.
  • The bill establishes clear supervisory, examination and enforcement mechanisms, with defined limits.
• Updates from the March 2025 Draft.
  • Prohibition on Unpermitted Issuance. It would be unlawful for any digital asset service provider to offer or sell a payment stablecoin in the U.S. unless a permitted issuer issues it. It would be unlawful for any person to offer a stablecoin issued by a foreign payment stablecoin issuer unless the issuer agreed to comply with lawful orders or reciprocal arrangements were in place. However, the Treasury may issue limited safe harbors. See Section 3.
  • Foreign Issuer Exception. The prohibition does not apply to foreign issuers that (i) are subject to oversight by a recognized foreign regulator, (ii) are registered with the OCC and (iii) hold reserves in a U.S. financial institution sufficient to meet U.S. customer liquidity needs. See Section 18.
  • Bank Secrecy Act Reporting. Issuers must monitor and report “any suspicious transaction relevant to a possible violation of law or regulation,” expanding prior requirements to report “suspicious activity.” See Section 4.
  • Stablecoin Certification Review Committee. Replaces the Treasury secretary with a new committee responsible for certifying whether a state regulatory regime meets federal standards. If certification is denied, states are entitled to an explanation and a 180-day cure period, with the ability to appeal to the D.C. Circuit. See Section 4.
  • Anti-Money Laundering Compliance. Permitted issuers must certify to their primary regulator that they have implemented anti-money laundering programs reasonably designed to prevent facilitation of money laundering by cartels or terrorist organizations.
• Democrats Withdraw Support. Nine Democrats who previously supported the GENIUS Act publicly withdrew their support, stating that the bill, as it currently stands, still has numerous issues that must be addressed. Four of the signatories, Sens. Ruben Gallego (D-AZ), Mark Warner (D-VA), Lisa Blunt Rochester (D-DE) and Andy Kim (D-NJ), voted in favor of the bill during its Senate banking committee markup in March. Notably, the two Democrats who cosponsored the GENIUS Act — Sens. Kirsten Gillibrand (D-NY) and Angela Alsobrooks (D-MD) — did not sign onto the statement and have not publicly withdrawn their backing of the bill.
• Cloture Vote. A Senate cloture vote on the motion to proceed to the GENIUS Act failed in a 48-49 vote, falling short of the 60 votes required to advance the bill to floor debate. Senate Democrats, along with three Republicans, voted against the motion. The vote followed a turbulent week of negotiations, during which Democrats and Republicans continued to work on potential compromise language. Despite the failed vote, lawmakers from both parties have expressed continued interest in negotiating a path forward for stablecoin legislation in the coming weeks.
• For more coverage on the GENIUS Act, please see here.

House Unveils Revised Market Structure Bill as Partisan Divide Turns Joint Hearing Into Competing Roundtables

• On May 5, the House Financial Services and Agriculture committees released a discussion draft of the market structure bill that built upon the framework introduced in the FIT21 legislation which passed the House last Congress, including a section-by-section overview. The draft is open to public comment from industry stakeholders and is expected to undergo multiple iterations before being formally introduced.
  • Digital Commodity Definition. The bill introduces the term “digital commodity,” which is defined as a commodity whose value is linked to a blockchain system, excluding securities and permitted payment stablecoins. It directs the CFTC and SEC to jointly issue rules clarifying key terms, including “digital commodity” and “mature blockchain system.” See Sections I and II.
  • CFTC Spot Market Authority. The bill would grant the CFTC authority over spot markets for digital commodities and establish a self-certification process for compliance. See Sections 403 and 404.
• On May 6, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Artificial Intelligence and the House Agriculture Subcommittee on Commodity Markets, Digital Assets and Rural Development were scheduled to convene a joint hearing titled “American Innovation and the Future of Digital Assets: A Blueprint for the 21st Century” to explore how oversight of digital assets should be divided between the SEC and CFTC.  
  • Partisan Divide. House Financial Services Ranking Member Maxine Waters (D-CA) issued a press release announcing plans to block the joint hearing with the Agriculture Committee. Joint hearings require unanimous consent from both Republican and Democratic members to proceed, so the formal “hearing” was transformed into a “roundtable.” Waters and other committee Democrats held a separate “shadow hearing” focused on potential conflicts of interest within the administration, including discussing a draft bill to establish certain digital asset prohibitions for government officers and employees.
  • Ongoing Market Structure Roundtable. Meanwhile, the primary market structure roundtable continued, with participants emphasizing the need to reduce regulatory overlap, clarify asset classification and develop a cohesive framework for both primary issuances and secondary market activity.
  • Jurisdictional Delineation. Lawmakers evaluated the respective roles of the SEC and CFTC, with an emphasis on resolving jurisdictional ambiguity, minimizing duplicative oversight and improving interagency coordination. The discussion also reviewed proposals for codifying regulatory authority through a revised market structure bill.

Chairman Hill Provides Update on Stablecoin and Market Structure Legislation

• On April 30, House Financial Services Committee Chairman French Hill (R-AK) appeared on the Crypto in America podcast to discuss the status of digital asset legislation, including efforts to advance stablecoin and market structure bills through Congress.
  • Stablecoin Legislation. Chairman Hill confirmed that House and Senate leaders are continuing to work to reconcile the STABLE Act and the GENIUS Act into a unified framework. He noted that the House version was marked up to align more closely with the Senate draft and emphasized the strong bipartisan support for both versions.
  • Market Structure Bill. Hill highlighted that in the last Congress, the Financial Innovation and Technology for the 21st Century Act (FIT21) passed the House with support from 71 Democrats.
  • Legislative Timeline. Hill stated the goal is to advance the stablecoin and market structure bills through the House and Senate and get them onto the president’s desk before the August recess.
  • Possibility of Combined Legislation. When asked whether the two bills might be combined into a single legislative package, Hill responded that he and Sen. Tim Scott (R-SC) are actively evaluating the best strategy and that no final decision has been made on combining them. Some in the industry are concerned that the market bill legislation will lose momentum in Congress if stablecoin legislation is signed into law. Others believe it is important to get a win for the industry.

Rep. Gooden Floats Idea for Digital Asset ATMs in Fed Buildings

• On May 1, Rep. Lance Gooden (R-TX) sent a letter to the General Services Administration (GSA), proposing the installation of digital asset ATMs in all federal buildings. The GSA oversees government-wide administrative services, including property management and federal facility operations.
• Gooden framed the proposal as a way to align federal infrastructure with broader efforts to position the United States as a global leader in cryptocurrency and blockchain technology. The move underscores a growing political interest in integrating digital assets into public-sector spaces.

Senate Commerce Committee Advances the Deploying American Blockchains Act

• On April 30, the Senate commerce committee passed the “Deploying American Blockchains Act” (S. 1492) unanimously by a voice vote. The bipartisan legislation would direct the secretary of commerce to lead federal policy initiatives related to blockchain and establish a National Blockchain Deployment Advisory Committee to guide blockchain integration across industries.
  • The legislation aims to promote the deployment, competitiveness and security of blockchain and distributed ledger technologies across critical sectors, including cybersecurity, supply chain resiliency, healthcare, e-commerce and decentralized identity management.
  • The bill now heads to the Senate and House for a full vote. For more on the Deploying American Blockchains Act, please see here.

Sen. Lummis Promotes the BITCOIN Act as National Debt Solution

• On May 2, speaking before Congress, Sen. Cynthia Lummis (R-WY) said the BITCOIN Act (S. 954) would address the national debt while securing America’s position as the global leader in financial innovation. Lummis reintroduced the act to create a national strategic bitcoin reserve in March of this year. For more on the BITCOIN Act, please see here.

Agency Updates

Two IRS Crypto Directors Leave the Agency

• On May 2, Seth Wilks and Raj Mukherjee, directors of the Office of Digital Assets at the Internal Revenue Service, announced their resignations after receiving deferred resignation offers from the Department of Government Efficiency (DOGE). During their time at the IRS, their work focused on building service, reporting, compliance and enforcement programs focused on digital assets. Notably, Wilks and Mukherjee worked to update the 1099-DA tax form for paying taxes on digital assets for brokers to report certain crypto sales and exchange transactions to the IRS as taxable events.