In a setback for the U.S. cryptocurrency sector, legislation regarding stablecoins has stalled in the Senate due to insufficient backing from Democratic members. Several Republican senators have criticized their Democratic colleagues for prioritizing “partisan politics over policy.”
Stablecoins Bill Fails to Move Forward
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act did not garner enough votes to proceed in the Senate, with several lawmakers retracting their support last week.
According to Reuters, only 49 senators supported the bill, falling short of the 60 needed to conclude the debate. Interestingly, two Republican senators opposed its advancement alongside Democrats.
Senator Bill Hagerty introduced the GENIUS Act in February, aiming to create a framework for regulating tokens like USDT and USDC under Federal Reserve guidelines.
This bill, co-sponsored by Senators Tim Scott, Cynthia Lummis, Kirsten Gillibrand, and Angela Alsobrooks, intended to form a regulatory environment that encourages innovation while aligning with the President’s goal of establishing the U.S. as a leader in crypto.
Initially perceived as a bipartisan initiative, the stablecoins legislation had garnered interest from multiple Democrats, who showed support over recent months. The bill underwent various amendments to address concerns, including stricter rules for stablecoin issuers and Anti-Money Laundering (AML) measures.
However, on May 3, ten Senate Democrats raised additional issues regarding the revised bill, surprising many. Among the critics, four who had previously backed the bill signed a dissenting statement.
These lawmakers expressed that the draft lacked essential AML and national security measures and included vague regulations that could lead to market exploitation.
Senator Elizabeth Warren also urged a rejection of the GENIUS Act, claiming it might facilitate “crypto corruption.” On May 4, she pointed to a potential conflict of interest involving the Trump family and a USD1 stablecoin arrangement with a UAE-based company.
Senators Decry Political Maneuvering
Senate Banking Committee Chairman Tim Scott, one of the bill’s co-sponsors, criticized Democrats for engaging in “political gamesmanship” with bipartisan legislation. Speaking in the Senate on May 8, Scott accused them of prioritizing party politics over essential policy and innovation.
It should have been a historic day for Americans to see their financial system opened up. Instead, we witnessed political maneuvering that places party politics above substantial policy and hinders innovation.
Scott asserted that the GENIUS Act had achieved bipartisan support in the Senate Banking Committee, arguing that the failure wasn’t tied to the bill’s content but was instead a vote against President Trump’s agenda.
Senator Lummis expressed her disappointment on X, stating, “Digital assets are the future, and America must take the lead. We must continue advancing legislation that maintains the dollar’s dominance while establishing the country as a global crypto leader.”
Treasury Secretary Scott Bessent emphasized the necessity of U.S. leadership in the area of stablecoins and digital assets. He criticized the Senate for missing an opportunity to provide that leadership by failing to pass the bill.
“Without federal oversight, stablecoins will face a confusing array of state laws instead of benefiting from a unified, growth-friendly federal framework. The world is watching as American lawmakers hesitate. Senators who obstruct progress today must either step up to lead or see digital innovation move abroad,” he concluded.
