Differences Between House's STABLE Act and Senate's GENIUS Act on Stablecoin Legislation
Exploration of contrasts in stablecoin legislations proposed by the House and Senate, as undertaken by French Hill.
The House's STABLE Act and the Senate's GENIUS Act, both aimed at regulating stablecoins, present significant differences in their regulatory approach, issuer control, treatment of foreign issuers, and the Treasury's role.
1. Regulatory Structure
The GENIUS Act establishes a clear and uniform federal regulatory framework for payment stablecoins, with a dual federal-state oversight model. It allows certain federally regulated banks, qualified nonbanks, and state-regulated issuers (under conditions) to issue stablecoins. State regimes regulating smaller issuers (< $10 billion market cap) must be "substantially similar" to federal rules, with certifications submitted to the Treasury and subject to federal override if standards are unmet. Issuers exceeding $10 billion in market cap must migrate to federal regulation or stop issuance.
In contrast, the STABLE Act, while details are not fully known, is believed to concentrate regulatory authority largely within the Treasury and the SEC, creating a less bank-centered regime and potentially imposing stricter licensing and operational control on stablecoin issuers.
2. Control of Stablecoin Issuers
The GENIUS Act assigns primary federal regulators based on issuer type. Subsidiaries of insured banks and credit unions answer to their respective federal regulators (OCC, FDIC, Federal Reserve, or NCUA), while federally licensed nonbank issuers fall under OCC oversight. The Act mandates strict reserve backing, disclosure, consumer protection, and anti-money laundering compliance. It balances federal and state control depending on issuer size and licensing.
The STABLE Act, on the other hand, is likely to impose a more centralized, Treasury/SEC-centric control regime without a clear federal-state dual model, focusing on stringent licensing and operational requirements for all issuers regardless of entity type.
3. Treatment of Foreign Stablecoin Issuers
The GENIUS Act does not explicitly mention foreign stablecoin issuers in the summaries, but by requiring stablecoin issuance to certain federally or state-regulated entities, it implicitly limits foreign issuer participation or subjects them to these standards if operating in the US.
The STABLE Act, although not explicitly detailed in the provided information, is generally viewed as more restrictive toward foreign stablecoin issuers, likely imposing barriers or prohibitions to non-US entities issuing stablecoins for the US market to enhance regulatory control.
4. Potential Conflict of Interest with Treasury’s Dual Role
The GENIUS Act creates a certification process overseen by the Treasury Secretary for state regulatory regimes and includes a Stablecoin Certification Review Committee, placing Treasury at the center of oversight. This raises concerns about a conflict of interest, given Treasury’s role in issuing US Treasuries (one of the permitted stablecoin reserve assets) while simultaneously overseeing stablecoin regulation—potentially affecting impartiality or creating market incentives.
The STABLE Act concentrates stablecoin regulatory authority more directly within Treasury and SEC. This concentration potentially intensifies conflicts since the Treasury would regulate stablecoins and also manage sovereign debt issuance, posing greater risk of regulatory capture or conflicting priorities.
A summary table is provided below for a clear comparison between the two acts:
| Aspect | GENIUS Act | STABLE Act | |--------------------------------------|---------------------------------------------------------------|--------------------------------------------------------------| | Regulatory Structure | Dual federal-state framework; issuer-based federal oversight | Centralized federal regulation primarily via Treasury/SEC | | Control of Issuers | Regulator depends on issuer type; strict reserve, disclosures | Stricter licensing, operational controls for all issuers | | Treatment of Foreign Issuers | Implicitly restricts via issuer eligibility | More restrictive toward foreign stablecoin issuers | | Treasury’s Dual Role Conflict | Treasury oversees state certification + stablecoin regulation; potential conflict due to Treasury bill issuance | Concentrates Treasury and SEC authority; greater conflict risk due to dual role |
In essence, the GENIUS Act favors a multi-layered, somewhat more flexible federal-state approach with nuanced regulator assignment, whereas the STABLE Act centralizes control more strictly under Treasury/SEC, with tighter issuer constraints and greater scrutiny on foreign issuers, increasing concerns around Treasury’s dual regulatory and fiscal roles.
Both bills are currently under consideration, and a reconciliation is needed to become law. The key areas requiring reconciliation include federal oversight thresholds, corporate ownership restrictions, and foreign issuer requirements. The GENIUS Act uses a Committee to add checks and balances in various areas compared to the House bill, which gives the Secretary of the Treasury considerable powers. The House's STABLE Act has no restrictions on the ownership of stablecoin issuers.
- In the context of stablecoin legislation, the GENIUS Act and the STABLE Act, while both focusing on regulation, present differences in the regulatory structure, with the GENIUS Act emphasizing a dual federal-state oversight model and the STABLE Act concentrating regulatory authority primarily within the Treasury and SEC.
- Regarding stablecoin issuer control, the GENIUS Act assigns regulators based on issuer type and maintains a balance between federal and state control depending on the issuer size and licensing, while the STABLE Act is more likely to impose a centralized control regime with stricter licensing and operational requirements for all issuers.
- When it comes to foreign stablecoin issuers, the GENIUS Act implicitly limits their participation or subjects them to federal or state standards if operating in the US, while the STABLE Act is generally viewed as more restrictive toward foreign entities, potentially barring them from issuing stablecoins in the US market.
