Hopes for a clear regulatory framework for stablecoins were dashed on Thursday as the U.S. Senate rejected the GENIUS Act, a bipartisan proposal aimed at giving the crypto industry a long-awaited set of rules. Instead of unity, the vote exposed a sharp political divide — one heavily influenced by Donald Trump's increasing involvement in digital assets.

A Step Forward, Two Steps Back

Just weeks ago, the GENIUS Act appeared to be the most promising attempt yet to create stablecoin legislation in the U.S. Designed as a bipartisan compromise, the bill aimed to regulate stablecoin issuance and solidify America’s position in global crypto leadership.

But on Thursday, only 49 senators voted to advance the bill — far short of the 60 needed to move it forward.

Trump’s USD1 Stablecoin Casts a Shadow

The political tides shifted after media reports linked Donald Trump to a new stablecoin project called USD1. The project, backed by World Liberty Financial — a firm allegedly tied to Trump’s family — secured a $2 billion investment from the UAE.

This revelation triggered alarm among Democrats. Senator Elizabeth Warren condemned the GENIUS Act for lacking safeguards against money laundering, foreign influence, and conflicts of interest. She warned that the bill could enable what she called "crypto corruption" under the guise of innovation.

Democrats Withdraw Support, GOP Lashes Out

As many as ten Democratic senators, who initially supported the bill, reversed their stance, demanding tougher AML provisions and national security protections. Republicans were quick to accuse them of playing politics to block Trump's potential crypto victory.

Senator Tim Scott called the reversal a result of “Trump Derangement Syndrome,” accusing Democrats of jeopardizing America’s digital future to score political points.

Lummis: “Deeply Disappointed”

Pro-crypto Senator Cynthia Lummis called the outcome a missed opportunity. She argued the bill was a well-constructed plan to protect consumers while fostering innovation and competitiveness.

Senator Bill Hagerty, the bill’s author, went further, stating that Democrats had effectively handed crypto leadership to the Chinese Communist Party, driven by fear of their party’s radical wing.

What Happens Next?

Senate Majority Whip John Thune announced plans to reintroduce the bill next week. However, given the current election-year tensions, it’s unclear whether a second attempt could gain traction.

For now, stablecoins in the U.S. remain unregulated, and the legislative process may have to restart from scratch.

Crypto Becomes a 2024 Campaign Battlefield

Once a bipartisan technical issue, crypto regulation has now become a political battlefield in the 2024 presidential race. What should have been a step toward digital clarity is now entangled in Trump-related controversies and campaign rivalry.

With the U.S. still lacking clear crypto laws, global competitors may surge ahead — while Washington keeps fighting over who gets the political win.

#Stablecoins , #CryptoRegulation , #USPolitics , #TRUMP , #CryptoNewss

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