- The Senate Banking Committee approved the GENIUS Act by an 18-6 vote shifting stablecoin oversight from the SEC to the OCC.
- SEC nominee Paul Atkins holds up to $6 million in assets including crypto and could reshape enforcement policies on digital assets.
- Financial experts warn that allowing commercial entities to issue stablecoins could lead to systemic risks and potential government bailouts.
The Senate Banking Committee has approved the GENIUS Act (S. 919), establishing regulatory standards for dollar-based stablecoin issuers. The bipartisan measure passed by an 18-6 vote on March 13 and now moves to the full Senate for consideration. The legislation seeks to define stablecoins as non-securities and place oversight responsibility on the Office of the Comptroller of the Currency (OCC) rather than the Securities and Exchange Commission (SEC).
The bill received backing from five Democratic senators despite opposition by Sen. Elizabeth Warren (D-Mass.). Critics argued that the proposed legislation would likely cause financial instability by allowing a broad range of entities to issue stablecoins, potentially exposing them to government bailouts. Proponents supported it because it would strengthen the U.S. dollar in international markets and enhance blockchain payment.
Regulatory Shifts and Concerns Over Financial Stability
The GENIUS Act has sparked debate among policymakers regarding the intersection of banking and commerce. According to financial experts, allowing large commercial institutions to issue stablecoins could lead to systemic risks. Professor Arthur Wilmarth from George Washington University Law School warns that uniting finances with commercial institutions creates more widespread economic weaknesses.
Sen. Kirsten Gillibrand (D-N.Y.) emphasized that the financial system needs stronger regulatory systems to prevent future crises like the collapse of Silicon Valley Bank. She expressed caution about efforts to reduce the GENIUS Act guidelines since this could weaken the financial system.
The bill’s progress aligns with broader regulatory shifts, including staffing reductions at key financial agencies. The SEC and OCC have seen significant workforce reductions, with approximately 500 SEC employees and 140 OCC workers accepting buyouts. Organizational restructuring in agencies’ capacity generates doubts about their ability to monitor digital assets.
SEC Leadership and Pro-Crypto Policies
The Senate Banking Committee is preparing for a confirmation hearing for SEC Chair nominee Paul Atkins on March 27 who holds significant support for digital assets. Atkins also served as former SEC commissioner before taking positions with FalconX and the Token Alliance. The nomination demonstrates forthcoming regulatory policies will adopt a more relaxed stance than those implemented under previous leadership.
The financial documents reported by Atkins revealed assets worth up to $6 million, including cryptocurrency assets worth up to $327 million. His holdings include equity in Anchorage Digital stocks and $1-$5 million worth of Off the Chain Capital shares. His former advisory work at FTX triggered increased congressional concern regarding potential conflicts of interest.
The Senate Banking Committee, under Chairman Tim Scott (R-S.C.), strongly indicates that it will confirm Atkins’s approval. The anticipated appointment of the new SEC commissioner would potentially lead to various significant organizational reforms, including a potential decrease in crypto company enforcement actions and innovative digital asset rulemaking efforts.
