Senate Democrats abruptly withdrew support for a bipartisan stablecoin regulation bill, citing security concerns and coincidentally following new crypto ventures launched by President Trump’s family.
Key Takeaways
- Nine Senate Democrats have pulled their support from the GENIUS Act, a bipartisan bill designed to create a federal regulatory framework for stablecoins.
- The Democrats cited inadequate anti-money laundering provisions, foreign issuer concerns, and national security issues as reasons for their withdrawal.
- The timing coincides with the Trump family’s entry into cryptocurrency markets, including the launch of “USD1” stablecoin by Donald Trump Jr. and Eric Trump.
- With Republicans holding 53 Senate seats and needing 60 votes for cloture, the bill now faces significant legislative hurdles without Democratic support.
- Senate Majority Leader John Thune still plans to advance the bill despite the eroding bipartisan backing.
Democrats Withdraw Support Citing Security Concerns
In a significant setback for cryptocurrency regulation, nine Senate Democrats announced on May 3 they would no longer support the GENIUS Act, a bill designed to establish regulatory clarity for stablecoins. The digital assets, which maintain value by being pegged to external currencies like the US dollar, now face continued regulatory uncertainty. The Democrats cited critical deficiencies in the bill’s security provisions as their primary reason for withdrawal.
“[T]he bill as it currently stands still has numerous issues that must be addressed, including adding 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,” explained Sen. Ruben Gallego (D-Ariz.).
Bipartisan Tensions Rise Over Stablecoin Regulation
The GENIUS Act, sponsored by Republican Senator Bill Hagerty of Tennessee, previously enjoyed bipartisan support and had passed the Senate Banking Committee with an 18-6 vote. The bill seeks to create a comprehensive regulatory framework for stablecoins, including licensing requirements, clear boundaries between state and federal regulation, and reserve requirements. Despite the Democratic departures, Senator Kirsten Gillibrand (D-N.Y.) reportedly maintains her support for the legislation.
“We cannot allow partisan games to derail the momentum we’ve seen over the past 3 months on this legislation. We have a choice here: move forward or underscore that digital asset and crypto legislation remains solely a Republican domain,” said Sen. Bill Hagerty (R-Tenn.).
It’s 2025 and stablecoins are stepping into the spotlight as key players in the evolution of global finance.
The U.S. is finally taking concrete steps to define the future of these digital dollars with two fittingly named acts.
The GENIUS Act and the STABLE Act, two… pic.twitter.com/cxiCltpWW4
— shaaa (@shaaa256) May 2, 2025
Trump Family Crypto Ventures Complicate Bill’s Future
The Democrats’ withdrawal coincides with President Trump’s family launching new crypto ventures. Donald Trump Jr. and Eric Trump recently backed World Liberty Financial’s introduction of a stablecoin named “USD1.” This timing has raised questions about potential conflicts of interest and political motivations behind the changing support for the bill. The stablecoin is reportedly linked to a $2 billion investment in the Binance crypto exchange by Abu Dhabi’s MGX, adding geopolitical dimensions to the debate.
“This is my President that we’re talking about, but I am willing to say that this gives me pause,” stated Republican Senator and Trump supporter Cynthia Lummis.
Legislative Hurdles Mount for Stablecoin Bill
Senate Majority Leader John Thune still plans to advance the bill to a full Senate vote, but the path forward has narrowed significantly. With Republicans holding 53 Senate seats and needing 60 votes for cloture to avoid endless debate, Democratic support remains essential. Senate Minority Leader Chuck Schumer has advised Democratic senators to withhold commitment to the bill, potentially to allow for amendments addressing their concerns.
The GENIUS Act would have established what Senator Hagerty called “a clear, pro-growth, and secure regulatory framework to modernize our payments system and cement U.S. dollar dominance.” Without sufficient bipartisan backing, the future of stablecoin regulation in the United States remains uncertain. The withdrawal of Democratic support signals that the initial optimism for regulatory clarity in the crypto industry has diminished, highlighting the need for further revisions before any comprehensive legislation can advance.
Sources:
- Democrats reverse course to oppose Senate crypto bill – POLITICO
- 9 Senate Democrats Withdraw Support From Bipartisan Cryptocurrency Bill | The Epoch Times
- Genius Act stablecoin Bill to receive Senate vote but Democrat support wanes – Ledger Insights – blockchain for enterprise
