In a major setback for crypto, the US Senate voted on Thursday to not advance a landmark stablecoin bill to potential passage after a number of Democrats balked at endorsing legislation they said would endanger consumers, the financial system, and national security.
By a vote of 48 yeas to 49 nays, the Senate rejected the Genius Act after Republicans had sought to fast-track a statuatory framework for the $246 billion stablecoin industry.
The Senate needed 60 votes to take the bill forward and submit it to the full Senate for a vote by simple majority and without a filibuster.
Senator John Thune, the majority leader, criticised Democrats for blocking the legislation. He said six versions of the bill, and numerous modifications made, had been made to satisfy the minority party’s concerns.
And he argued that Democrats could have voted for the bill on Thursday and sought changes on the floor of the Senate before a final vote of approval.
“I just don’t get it, I dont know what more they want,” Thune, a senator from South Dakota. “It makes you wonder whether this is about the bill at all or if it’s Democrats obstructing because they want to deny Republicans or President Trump a bipartisan win.”
Heavy pressure
But Democrats said the bill was fundamentally flawed from the get-go.
“The bill ignores basic protections that apply to every other financial product available in America,” Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, said in a statement on March 13.
In the last week, the bill’s Republican sponsors came under heavy pressure from Democrats who said crypto legislation was fraught with conflicts of interest because of President Donald Trump’s crypto ventures.
Backed by Minority Leader Chuck Schumer, Senate Democrats highlighted how World Liberty Financial, a crypto venture backed by the Trump family, had issued its own stablecoin.
Conflict of interest
Lambasting the move as yet another “conflict of interest” on the part of the president, Democrats sought to hold up the bill.
But Senator Tim Scott, the Genius Act’s champion and the chair of the Senate Banking Committee, pushed back on those arguments.
Despite eleventh hour appeals and numerous meetings to find consensus and 60 votes, Scott and his colleagues came up short.
Now the focus will turn to next steps in the Senate, as well as other pieces of crypto legislation backed by Republicans, and many Democrats.
On Monday, GOP members in the House of Representatives introduced a so-called market structure bill that will define which cryptocurrencies are commodities and should be regulated by the Commodity Futures Trading Commission, and which should be overseen by the Securities and Exchange Commission.
Flurry of activity
The flurry of legislative activity signals a watershed for the cryptocurrency industry. If Congress and the White House establish a clear regulatory regime, many traditional investment firms and banks could jump into the arena with new products and services.
The clarity would also be a boost for crypto stalwarts such as Coinbase, Kraken, and Ripple.
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at [email protected]. Edward Robinson is the story editor for DL News. Contact the author at [email protected].
