A group of nine pro-crypto U.S. Senate Democrats has unexpectedly withdrawn support for the US stablecoin bill, dealing a potential blow to its chances of becoming law. The lawmakers argue that the bill in its current form lacks sufficient safeguards, raising concerns over national security, anti-money laundering (AML) compliance, and oversight of foreign issuers.
The US stablecoin bill, formally known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, was poised for a Senate vote in the coming days. However, this sudden opposition could delay or even derail the legislation, which aims to establish the first comprehensive regulatory framework for stablecoins in the U.S.
Why Democrats Are Pushing Back
According to a May 3 report from Politico, the nine Senate Democrats—including Senators Ruben Gallego, Mark Warner, and Lisa Blunt Rochester—issued a joint statement declaring they would oppose the US stablecoin bill unless significant revisions are made.
“The bill still has numerous issues that must be addressed,” the lawmakers stated. “We cannot support advancing it in its current form.”
The Democrats had previously backed the bill when it passed through the Senate Banking Committee in March. However, recent revisions failed to alleviate their concerns, particularly around accountability for noncompliant issuers and the risks posed by foreign stablecoin operators.
What’s at Stake for the Crypto Industry?
The US stablecoin bill has been widely supported by the crypto industry as a crucial step toward regulatory clarity. Stablecoins—digital assets pegged to fiat currencies like the U.S. dollar—are a cornerstone of crypto trading and decentralized finance (DeFi). Without clear regulations, their growth could be stifled by legal uncertainty.
Senator Bill Hagerty, the Republican leading the bill, has championed the legislation as a way to foster innovation while ensuring consumer protection. However, the Democrats’ withdrawal of support complicates its path forward.
“We remain committed to shaping responsible crypto regulation,” the dissenting senators said. “But this bill needs stronger safeguards before it moves forward.”
Could the Fed’s Policies Influence the Outcome?
The debate over the US stablecoin bill comes amid ongoing tensions between lawmakers and federal regulators. On April 27, Caitlin Long, CEO of Custodia Bank, criticized the Federal Reserve for maintaining restrictive policies that favor big-bank-issued stablecoins while limiting crypto innovation.
Long argued that a federal US stablecoin bill could override the Fed’s stance, urging Congress to act swiftly. “Once this bill becomes law, it could nullify the Fed’s anti-crypto guidance,” she said. “Congress should hurry up.”
What’s Next for the US Stablecoin Bill?
The Senate is expected to begin floor discussions on the US stablecoin bill in the coming days, with a potential vote next week. However, without Democratic support, its passage is uncertain.
Key sticking points include:
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Stronger AML and national security provisions
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Clearer rules for foreign stablecoin issuers
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Enforcement mechanisms for noncompliant actors
If the bill fails, it could delay stablecoin regulation for years, leaving the industry in limbo.
Final Thoughts
The sudden opposition to the US stablecoin bill highlights the challenges of crafting crypto legislation that satisfies both parties. While Republicans and industry advocates push for swift adoption, Democrats demand stronger protections.
As the Senate prepares for a critical vote, the future of stablecoin regulation hangs in the balance. One thing is clear: the US stablecoin bill remains a pivotal piece of legislation that could shape the crypto landscape for years to come.
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