Bipartisan Cryptocurrency Bill Faces Setback as Democratic Support Erodes

People seated in a large governmental assembly hall

Nine Senate Democrats abruptly withdrew support for the GENIUS Act, a bipartisan cryptocurrency bill aimed at regulating stablecoins, throwing the legislation’s future into doubt despite earlier momentum and Republican backing.

Quick Takes

Nine Senate Democrats have pulled their support from the GENIUS Act, citing inadequate security provisions related to anti-money laundering and national security concerns
The bill, which passed the Senate Banking Committee with an 18-6 vote, now faces an uphill battle as Republicans need Democratic votes to reach the 60-vote threshold
The Trump family’s recent venture into cryptocurrencies, including the launch of a stablecoin called “USD1,” has complicated the political landscape around the legislation
Senate Majority Leader John Thune still plans to bring the bill for a vote, while Senator Hagerty warns against letting “partisan games” derail progress

Democrats Withdraw Support Citing Security Concerns

A group of nine Senate Democrats announced they will no longer support the GENIUS Act, a bill designed to create a federal regulatory framework for stablecoins in the cryptocurrency industry. The senators, including Sen. Ruben Gallego (D-Ariz.), expressed concerns about insufficient protections in the legislation. The withdrawal represents a significant setback for what had been considered one of the more promising bipartisan efforts in the cryptocurrency regulation space this year.

“[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,” said Sen. Ruben Gallego (D-Ariz.).

The GENIUS Act, sponsored by Senator Bill Hagerty (R-Tenn.), aims to establish regulatory clarity for stablecoins, which are digital assets fixed to the value of other assets like the U.S. dollar. Unlike more volatile cryptocurrencies such as Bitcoin, stablecoins are designed to maintain a stable value, making them potentially more useful for everyday transactions and as a store of value in the digital economy.

Republicans Push Back Against Withdrawal

Senator Hagerty expressed frustration with the Democrats’ withdrawal of support, suggesting political motivations might be at play rather than genuine policy concerns. The bill had previously received bipartisan backing and was passed by the Senate Banking Committee with an 18 to 6 vote, including support from at least five Democrats. Senate Majority Leader John Thune still plans to bring the legislation to the Senate floor despite the setback.

“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.).

The timing of the Democrats’ withdrawal coincides with Senate Minority Leader Chuck Schumer’s advice to party members to withhold commitment to the bill to allow for potential amendments. Republicans hold 53 seats in the Senate, meaning they need at least seven Democratic votes to reach the 60-vote threshold required for cloture to prevent endless debate and move the legislation forward.

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 Political Landscape

The deterioration of Democratic support comes amidst new cryptocurrency ventures by the Trump family, which may have influenced the political dynamics surrounding the bill. Donald Trump Jr. and Eric Trump recently launched a stablecoin named “USD1” through Trump-backed World Liberty Financial. This development has raised eyebrows across the political spectrum, with even some Republican senators expressing concern.

The stablecoin launch has connections to a $2 billion investment in the Binance crypto exchange by Abu Dhabi’s MGX, raising concerns about foreign government affiliations. This situation has created unusual political alignments, with Senator Elizabeth Warren, a Democrat, criticizing the venture as “corruption,” while Republican Senator Cynthia Lummis, a Trump supporter, admitted the situation “gives me pause.”

“This is my President that we’re talking about, but I am willing to say that this gives me pause,” Republican Senator and Trump supporter Cynthia Lummis said.

Future of Stablecoin Regulation Remains Uncertain

The initial optimism for achieving regulatory clarity on stablecoins in the United States has now diminished significantly. Proponents of the GENIUS Act argue that without a federal framework, the industry will continue to face a patchwork of state regulations that could hamper innovation while potentially allowing security vulnerabilities to persist. Senator Hagerty has emphasized the bill’s importance for cementing U.S. dollar dominance in the evolving digital economy.

“The GENIUS Act establishes a clear, pro-growth, and secure regulatory framework to modernize our payments system and cement U.S. dollar dominance,” said Sen. Bill Hagerty (R-Tenn.).

As the situation unfolds, cryptocurrency market participants are watching closely, with Bitcoin prices showing volatility at the start of the week. Industry experts suggest that while the immediate prospects for the GENIUS Act may have dimmed, the need for comprehensive stablecoin regulation remains pressing, and negotiations are likely to continue. The bill may require substantial revisions to address the Democrats’ concerns before it can secure the necessary support to advance.