A key legislative initiative for the cryptocurrency sector in the United States, known as the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), was halted today in the Senate. The proposal failed to gain the necessary support after Democratic lawmakers argued that it did not contain adequate protections to prevent corruption, especially given the potential for conflicts of interest related to President Donald Trump's digital asset business.
The vote, which resulted in a tight outcome of 48 to 49, represents a major blow to the digital currency industry, which was hoping for a federal regulatory framework for stablecoins. According to statements from the Senate Banking Committee, the failure of the bill leaves the regulation of issuers of these currencies and the assets backing them in limbo, which would have validated the legitimacy of the sector within the U.S. financial system.
The Democratic opposition, along with the votes of Republican Senators Rand Paul of Kentucky and Josh Hawley of Missouri, was decisive in stopping the progress of the bill.
Concerns about corruption were the main sticking point. Days before the vote, Senator Elizabeth Warren had expressed strong reservations. "The possibilities of corruption are vast," she stated. "A business partner of Trump has been imprisoned and is seeking a pardon. Nations seeking tariff reductions could win his favor through agreements on stablecoins." Warren also criticized the lack of explicit restrictions in the GENIUS Act to prevent the president from gaining economic benefits from digital assets during his term.
While the bill's halt represents a setback for the formalization of stablecoins, from the perspective of its detractors, it ensures that any future legislation on the matter must include stronger safeguards against corruption and conflicts of interest, thus setting a precedent for a more cautious approach to regulating this innovative financial sector.