US Senate crashes stablecoin hopes as GENIUS Act gets shot down

On May 8, the United States Senate failed to push forward the long-anticipated GENIUS Act, which would create clear rules for stablecoins. The bill, which had bipartisan support, was critical in giving the U.S. a strong foothold in digital asset regulation.

In a vote on Thursday, only 49 senators voted to advance the bill to a full vote, falling short of the 60 votes needed to end debate on the bill formally. Notably, two Republican senators – Senator Josh Hawley and Senator Rand Paul – voted alongside Democrats against moving forward with the bill.

Democrats, who had once supported the GENIUS Act, withdrew their support after media reports connected President Donald Trump to a new cryptocurrency project. A company believed to be linked to Trump’s family, World Liberty Financial, had introduced its stablecoin two months earlier, USD1, and netted a $2 billion investment from the United Arab Emirates.

This raised red flags. Democrats charged that Trump was shaping public policy to his financial benefit. Senator Elizabeth Warren, a leading voice on the Senate Banking Committee, said the GENIUS Act — which was approved last week — failed to have serious safeguards to guard against money laundering, foreign interference, and conflicts of interest.

She believes the bill would clear the way for what she called “crypto corruption” and that it could be used to hide corrupt financial practices in the name of innovation.

Ten Democratic senators previously in support of the bill switched their votes. They called for more stringent anti-money laundering rules and national security protections. They cast their votes against moving the bill forward when those changes could not be promised to them.

Republicans blame democrats for derailing stablecoin bill

Republicans were quick to seize on the Democrats’ reversal. Senator Tim Scott, a senior member of the Banking Committee, said Democrats were allowing their animus toward President Trump to get in the way of making progress. 

He called it “Trump Derangement Syndrome” and said Democrats would go so far as to damage the US’s digital future to prevent Trump from scoring what they imagined was a win.

The pro-crypto Republican Senator Cynthia Lummis said she was “deeply disappointed“ by the outcome. She said it had been a significant bipartisan bill that was thoughtfully designed to regulate stablecoins, protect consumers, and help the US remain competitive.

In an X post, Senator Bill Hagerty, who introduced the bill, stated that Democrats just unilaterally ceded American leadership capability in the digital asset industry to the CCP because they fear the far-left radicals of their party.

Congress stalls progress on stablecoin framework

Senate majority leader John Thune said he would offer a motion to reconsider the bill next week. That means the GENIUS Act could come up for another debate. But it’s unclear whether the current political climate will allow a second round to survive.

The bill had initially been slated for a final vote by May 26. It would have been the first significant US cryptocurrency regulation if passed — a milestone for the industry.

Now, the entire process may have to start over. The bill may return to the committee level. At this point, lawmakers would likely try reintroducing trust and a new balance.

Another high-profile crypto proposal was recently derailed by a powerful Democrat, Representative Maxine Waters, who described the plan as “Trump’s corruption in disguise.”

It’s a turning point for US crypto policy. Crypto regulation became a political battleground during the 2024 presidential race. The vote’s aftermath suggests digital asset legislation is also almost certainly contentious, with deep lines drawn and more than a little political math set to be done.

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