In a surprising turn of events, a cadre of pro-crypto Democrats in the U.S. Senate has withdrawn support for a pivotal stablecoin bill, citing lingering issues that have yet to be addressed. This unexpected shift, reported by Politico on May 3, threatens to impede progress on what could be the first comprehensive regulatory framework for stablecoins in the United States.
The Legislative Quagmire
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, spearheaded by Senator Bill Hagerty, was initially met with bipartisan enthusiasm when it passed through the Senate Banking Committee back in March. However, as the bill inches closer to a Senate floor vote—anticipated in the upcoming weeks—dissent has emerged from within Democratic ranks.
In a joint statement, nine Senate Democrats, including Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim, articulated their apprehensions. They noted that despite amendments made post-committee approval, the bill still falls short of adequately addressing critical issues such as Anti-Money Laundering (AML) measures, national security concerns, and accountability for foreign issuers and noncompliant entities. “There are still numerous issues that must be addressed,” the Democrats declared, threatening to block a procedural vote unless further revisions are made.
A Rift in the Crypto Coalition
This about-face by the Democrats highlights a growing schism in the party over the direction of crypto regulation. While the crypto industry has hailed the GENIUS Act as a necessary step toward regulatory clarity, the Democrats’ retreat underscores the complexities at play—particularly the balance between innovation and oversight. As explored in our recent coverage of U.S. Congress Braces for Intense Debate Over Crypto Legislation This Summer, the legislative landscape is fraught with challenges that extend beyond stablecoins.
Notably absent from the list of dissenting voices are Senators Kirsten Gillibrand and Angela Alsobrooks, who co-sponsored the bill alongside Hagerty. Their continued support suggests that the bill’s fate is far from sealed, even as it faces increased scrutiny.
Caitlin Long, founder and CEO of Custodia Bank, weighed in on the legislative impasse, critiquing the U.S. Federal Reserve’s stance on stablecoins. She pointed out that despite relaxing certain crypto partnership rules, the Fed maintains an anti-crypto stance that favors bank-issued stablecoins. Long’s comments underscore the urgency for a federal stablecoin bill to override existing prohibitions and pave the way for broader crypto engagement. This urgency is further highlighted by recent industry moves, such as Ripple Offered $4B-$5B for Stablecoin Issuer Circle, indicating the high stakes involved in stablecoin regulation.
The Path Forward
The Democrats, while voicing their concerns, have reiterated their commitment to crafting sensible crypto regulations. “We are eager to continue working with our colleagues to address these issues,” they stated. This willingness to dialogue suggests potential for compromise, but the path forward remains fraught with challenges.
As the Senate prepares to deliberate on the GENIUS Act, the broader crypto market is left in a state of uncertainty. Will the bill’s proponents manage to assuage the Democrats’ concerns, or will the legislation stall, leaving the regulatory landscape as murky as ever?
The stakes are high, with implications that extend far beyond the Senate chamber. Should the bill pass, it could potentially override the Federal Reserve’s restrictive policies and establish a precedent for crypto regulation in the United States. But the clock is ticking, and as the world watches, the outcome is anything but certain.
The ongoing debate raises questions about the future of crypto legislation in the U.S. Will lawmakers rise to the challenge and bridge the divide, or will political gridlock prevail? One thing is clear: the next few weeks could prove pivotal for the crypto industry’s regulatory trajectory.
Source
This article is based on: Pro-crypto Democrats pull support for stablecoin bill in last minute
Further Reading
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- Trump’s Crypto Sherpa Bo Hines Says Crypto Legislation on Target for Quick Completion
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
