In a rare occurrence, which may only last for a week, Democrats in the Senate showed some spine and voted down an important procedural vote on the GENIUS Act, a bill that would establish a (very weak) regulatory framework for the use of stablecoins. It was expected that the bill would get rubber-stamped, given the number of crypto-curious Dems in the caucus, but it will now have to go back to the drawing board before coming up for a vote again, which could happen as early as next week.
The bill ultimately failed a cloture vote Thursday, achieving just 48 of the necessary 60 votes that would have formally ended debate on the bill and allowed it to advance to a full vote. There was expectation in advance of the vote that enough Democrats would cross the aisle and vote in favor of moving the bill forward, according to reporting from The American Prospect. But Democratic Senators who are members of the crypto caucus—Ruben Gallego, Mark Warner, Lisa Blunt Rochester, Andy Kim, Kirsten Gillibrand, and Angela Alsobrooks (a co-sponsor for the bill) all voted no to closing debate.
The change of heart from Dems—who, again, could easily change course and pass this thing next Monday—appears to stem in part over concerns regarding Donald Trump’s growing crypto empire, which includes a recently launched stablecoin called $USD1 that the Trump-connected World Liberty Financial announced earlier this year. That stablecoin was recently in the news because an investment firm in Abu Dhabi announced it would use $USD1 to invest $2 billion into cryptocurrency exchange Binance, creating a seemingly endless web of conflicts of interest with the President at the center.
Following that announcement, along with some reportedly unexpected changes made to the bill by Republicans without including Democrats in the conversation, led to Thursday’s failure. Decrypt reported that both parties met repeatedly in the 24 hours leading up to the vote in hopes of settling their differences, but couldn’t reach an agreement in time. Once an expected “yes” vote, Arizona Republican Ruben Gallego explained, “The Republicans killed it, because my colleagues don’t have enough time to read the changes that we have been proposing.”
Senator Warner clearly signaled that the plan is still to pass this thing, just with some changes. In a statement, he said, “Stablecoins are undeniably a part of the future of finance, and the United States should set the standard for responsible innovation in the digital financial space.” He also said that he remains “fully committed” to passing it once he and his colleagues are able to “strengthen this legislation.”
Should the bill pass, it’ll establish some very light regulations for the issuance of stablecoins, which are supposed to be pegged to fiat currency and used to facilitate transactions. The bill would set standards for capital and liquidity requirements, establish mandatory audits, and make stablecoin issuers subject to complying with the anti-money laundering requirements of the Bank Secrecy Act. And while that might be better than nothing, it also is basically exactly what crypto operators have lobbied for.
The bill also takes zero steps toward barring public officials from profiting off stablecoins, which has suddenly become a pressing issue because the President is monetizing the office. Trump and his family have reportedly made $2.9 billion off their crypto ventures thus far, and there is currently nothing standing in the way of his continued profiting off a mostly unregulated industry that his administration currently sets the standard for.
Dems will reportedly push for protections to restrict Trump and other elected office holders from cashing in on stablecoins, per Axios, but it’s unclear if that will prove to be a true breaking point or if Dems will fold. We’ll find out next week if this newfound spine will hold up over the weekend.
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