On a negative development for the US crypto industry, the highly anticipated stablecoins legislation has failed to advance in the US Senate after not receiving enough support from Senate Democrats. Several Republican senators have slammed the Democratic lawmakers for putting “partisan politics above policy.”
Democrats Block Stablecoins Bill
On Thursday, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act failed to pass the cloture vote in the US Senate after several lawmakers withdrew their support in the past week.
As reported by Reuters, only 49 senators voted to advance the bill, falling short of the 60 votes required to end the debate on the legislation. Notably, two Republican senators voted against advancing the bill alongside Democrats.
In February, US Senator Bill Hagerty introduced the GENIUS Act to develop a framework to allow tokens like USDT and USDC to fall under the Federal Reserve Rules.
The bill, co-sponsored by Senators Tim Scott, Cynthia Lummis, Kirsten Gillibrand, and Angela Alsobrooks, would establish a “safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto.”
The stablecoins legislation was considered a bipartisan effort to increase regulatory clarity after multiple Democrats showed support over the past few months. Additionally, the bill went through various amendments to address senators’ concerns, including stricter requirements for stablecoin issuers and Anti-Money Laundering (AML) provisions.
Nonetheless, ten Senate Democrats expressed further concerns about the revised version of the bill on May 3, reportedly catching many lawmakers off guard. Among the critics, four Democrats who previously supported the bill signed the opposition statement.
The lawmakers alleged that the draft bill omitted essential AML and national security safeguards and had ambiguous regulations that could expose crypto markets to exploitation.
Similarly, Senator Elizabeth Warren urged Congress to reject the GENIUS Act as it could pave the way for alleged “crypto corruption.” On May 4, the crypto-skeptic lawmaker claimed that the Trump family could benefit from World Liberty Financial’s (WLFI) USD1 stablecoin deal with MGX, a firm based in the United Arab Emirates.
The deal comprises a $2 billion investment connected to Binance and WLFI’s stablecoin. Warren affirmed that the Senate shouldn’t approve the crypto bill “to enable this type of corruption.”
US Senators Call Out ‘Political Gamesmanship’
One of the bill’s co-sponsors, Senate Banking Committee Chairman Tim Scott, called out Democrats for “playing politics with bipartisan legislation.” Speaking on the Senate floor on May 8, Scott accused Senate Democrats of putting partisan politics above policy and innovation.
It should have been a historic day for Americans (…) to see their financial system democratized (…). Instead, we witnessed a disappointing display of political gamesmanship that puts partisan politics above policy, and obstruction above innovation.
He affirmed that the GENIUS Act was a bipartisan achievement at the Senate Banking Committee, adding that the shift was not driven by a change in the bill’s “substance.” He alleged that the failure wasn’t a vote against the legislation, but a vote against President Trump and his legislative agenda.
Senator Lummis also expressed her disappointment on X: “Make no mistake, digital assets are the future and America must lead the way,” she stated, adding that “It’s important that we continue moving digital asset legislation forward that preserves America’s dollar dominance and makes America the crypto capital of the world.”
Meanwhile, Treasury Secretary Scott Bessent argued that the world needs American leadership for stablecoins and other digital assets to thrive. He criticized the Senate for missing “an opportunity to provide that leadership” by passing the bill.
“Without it, stablecoins will be subject to a patchwork of state regulations instead of a streamlined federal framework that is more conducive to growth and competitiveness. The world is watching while American lawmakers twiddle their thumbs. Senators who voted to stonewall U.S. ingenuity today face a simple choice: Either step up and lead or watch digital asset innovation move offshore,” he concluded.
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