Crypto Bill Stalls in Senate as Democrats Withdraw Support
WASHINGTON—The U.S. Senate on May 8 failed to advance a bill that would regulate 'stablecoins' in the cryptocurrency market, dealing a blow to a bipartisan effort backed widely by the industry.
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, sponsored by Sen. Bill Hagerty (R-Tenn.), was intended to bring about a system of regulations for the market of stablecoins, which are digital tokens whose value is pegged to another asset (e.g., the U.S. dollar, bonds, or securities). Stablecoins are attractive to larger and more risk-averse investors—for example, pension funds, sovereign wealth funds, asset managers, and wealthy family offices—who want to invest in cryptocurrency without the risks of value fluctuation. The bill would require permits for issuing stablecoins, prevent 'rehypothecation' of stablecoins by lenders, and delineate the boundaries between state and federal regulators, among other rules.
After it was introduced, the GENIUS Act had several Democratic supporters and co-sponsors, indicating that it may receive the requisite 60 votes on cloture to avoid a filibuster and advance to final passage. However, on May 3, several Democratic senators led by Sen. Ruben Gallego (D-Ariz.) announced they were withdrawing support from the bill unless changes were made to address their concerns over what they called deficiencies in the bill's security provisions. They did not specify the deficiencies, but demanded 'stronger provisions on anti-money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system, and accountability for those who don't meet the act's requirements.'
The cloture motion considered on May 8 failed in a 48–49 vote.
'A 'no' vote today is a vote against crypto and against innovation,' Hagerty said in a
All Republicans voted in favor of the bill except Sens. Rand Paul (R-Ky.) and Josh Hawley (R-Mo.). Senate Majority Leader John Thune (R-S.D.) voted 'nay' only for the purpose of offering a 'motion to reconsider' the bill at a later date, as he supports the bill. No Democratic senator voted in favor of the bill, not even Sen. Kirsten Gillibrand (D-N.Y.), who co-sponsored it with Hagerty and three other senators.
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The bill's rejection comes at a moment when President Donald Trump's family has launched a stablecoin venture. The company World Liberty Financial—run by Donald Trump Jr. and Eric Trump, the president's two eldest sons—in March created a stablecoin named 'USD1,' which is pegged to the U.S. dollar and U.S. Treasury bonds, among other assets. USD1 presently has a
Senate Democratic holdouts had been expecting revised text of the bill, which may have satisfied their concerns as expressed by Gallego and the signatories, until shortly before the vote. Democratic senators cited this reason, as well as the Trump family's involvement in the stablecoin market, as the reasons for voting against cloture.
'It is absolutely absurd that Republicans are forcing a vote today on a stablecoin bill that we have not even had an opportunity to read yet,' Sen. Cory Booker (D-N.J.)
'The Senate should not vote for any stablecoin legislation that allows Trump to continue this corruption,' Sen. Chris Murphy (D-Conn.)
It remains to be seen whether the bill will be reconsidered. Hagerty's office did not immediately respond to a request for comment.
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