Since Trump returned to the White House, the stablecoin bill, which has attracted much attention and is considered to be going smoothly, has recently encountered setbacks. The (GENIUS Act), officially the 'Guiding and Establishing the National Innovation Act for Stablecoins in the US,' is a piece of legislation proposed by the US Senate on February 4, 2025, aiming to establish a comprehensive regulatory framework for 'payment stablecoins' within the US, to promote financial innovation, protect consumers, prevent illegal financial activities, and consolidate the dollar's dominant position in the global financial system.
This landmark crypto bill encountered unexpected obstacles during negotiations, as nine key Democratic senators publicly stated on May 3 that they refuse to support the revised version proposed by Republicans last week. On May 9, the Senate voted 48-49 to reject the (Stablecoin Innovation and Security Act), as Democrats collectively opposed the motion to advance the bill. This bill aims to establish the first federal regulatory framework for stablecoins linked to the US dollar, which is one of the focal points of Trump's crypto policy.
Also today, the long-standing case between Ripple and the SEC finally reached a conclusion, and its connections with US political groups were brought to light by Democrats, who publicly emphasized the need to prohibit the Trump Organization from participating in cryptocurrencies. With conflicts of interest compounded by partisan struggles, can Trump continue his previous plans to build a new crypto empire?
Political group interest conflicts have caused a rift between the two houses.
Looking back at 2024, both houses have generally been 'in step' on crypto legislation. In May last year, the House passed the (21st Century Financial Innovation and Technology Act) (FIT21) by a vote of 279 to 136, establishing a new regulatory framework for digital currencies, with the support of 71 Democrats, indicating bipartisan consensus. The bill emphasizes the role of CFTC in crypto regulation and aims to promote innovation through clear rules; Congressman Young Kim referred to it as 'a new era of US crypto regulation.' Although the Senate has been slower, it has also proposed the (Lummis-Gillibrand Payment Stablecoin Act) under the push of Senators Cynthia Lummis and Kirsten Gillibrand, attempting to establish regulations for stablecoins. In March this year, the House, with bipartisan support, repealed a Biden administration crypto tax rule, and the Senate did not explicitly oppose it; both sides aim to provide legal protection for the industry while safeguarding investors.
Due to last year's successful campaign fundraising and Trump's return to the political arena, the influence of the cryptocurrency industry has surged. If this stablecoin bill passes, it will become the first significant crypto reform after years of lobbying in the Senate.
However, recently the Senate has delayed passing a comprehensive bill similar to FIT21, and negotiations on stablecoin regulation have stalled due to opposition from key Democrats. Senate Minority Leader Chuck Schumer urged Democratic colleagues to refrain from committing to support the (GENIUS Act) during a closed-door meeting on May 2, seeking more room for amendments. The two houses have developed differing attitudes towards crypto regulation, with the most direct reason being the increasingly close ties between the crypto industry and political groups, many of which are suspected of manipulating the market for personal gain.
The well-known lawsuit between Ripple and the US Securities and Exchange Commission is a good example. On May 9, court documents revealed that Ripple and the SEC had reached a settlement agreement, intending to lift the injunction imposed on Ripple by the court ruling in August 2024, and of the $125 million civil penalty, only $50 million would be paid to the SEC, while the remaining $75 million would be returned to Ripple. Both parties agreed not to appeal and not to request the withdrawal of previous judgments.
Ripple's Chief Legal Officer Stuart Alderoty emphasized on social media the 'end of the case' and referred to it as 'the final update,' attempting to shape the company's compliance image to dispel market doubts. Additionally, Ripple CEO Brad Garlinghouse announced a $2 billion investment in crypto industry acquisitions, shifting the focus to business expansion rather than the case itself. He also discussed the financial damage caused by the lawsuit, stating that legal proceedings could result in value losses of up to $15 billion for XRP holders.
Although the settlement agreement did not clarify the securities status of XRP, Ripple has promoted XRP price fluctuations by emphasizing 'favorable policies' and 'institutional cooperation.' Previously, David Sacks, appointed by Trump as the crypto czar, publicly claimed that 'Ripple won the SEC lawsuit' and pushed for the legitimacy of XRP, SOL, ADA, and other tokens.
Ripple's long-standing 'compliance statement' has not genuinely advanced the legitimacy of cryptocurrencies; its settlement with the SEC seems more like a cover-up for deeper conflicts of interest, especially since XRP holders have suffered losses of up to $15 billion due to the lawsuit, raising suspicions of Ripple manipulating the market. Democrats question the relationship between their statements and the crypto assets held by the Trump family, and senior Senator Richard Blumenthal has initiated a preliminary investigation into potential conflicts of interest and illegal activities involving Trump family-related enterprises. Calls within the Democratic Party for a thorough investigation of crypto interest groups are growing louder, which even affects the advancement of crypto legislation.
According to TheBlock, Senate Majority Leader John Thune has submitted a motion to end debate on the Stablecoin (GENIUS Act) (officially the 2025 Stablecoin Innovation Act), with a key procedural vote scheduled for Thursday. The bill, led by Bill Hagerty, requires that stablecoins be 100% backed by liquid assets such as US dollars or short-term government bonds. It needs 60 votes to pass, while the current Senate has 53 Republican seats and 47 Democratic seats, meaning Republicans need at least 7 Democratic votes.
On the Democratic side, Senator Ruben Gallego and 9 others jointly opposed the current version, demanding stronger regulation on foreign issuers and anti-money laundering provisions. Senator Richard Blumenthal has sent an inquiry letter to the Trump-associated cryptocurrency company World Liberty Financial, investigating potential conflicts of interest. On the Republican side, Rand Paul criticized the over-regulation of stablecoins, while Senator Josh Hawley expressed concerns about tech giants issuing stablecoins.
In response, Coinbase CEO Brian Armstrong stated that Congress is facing a great opportunity to advance stablecoin and market structure legislation this week. Coinbase strongly supports the Senate's debate on the (GENIUS Act), which requires 60 votes to pass. Coinbase also welcomes the House's efforts to sustain the momentum of FIT21. To make comprehensive legislation a law before August, both houses need to act immediately.
What is the focal point of the disagreement?
The core objective of the (GENIUS Act) is to establish a federal regulatory framework for stablecoins, ensuring their stability linked to the US dollar while promoting innovation in the crypto industry. The bill received bipartisan support in the Senate Banking Committee in March this year.
The most fundamental disagreement likely stems from Trump, the 'crypto president.' NFTs, meme coins, DeFi, stablecoins—Trump has deeply intertwined his personal brand with the crypto space. Recently, an 'Innovators in Cryptocurrency and AI' dinner became a hot topic, with single ticket prices reaching as high as $1.5 million.
Of course, the most ostentatious part of this is his stablecoin fund project. Trump issued stablecoins through the crypto company 'World Liberty Financial' and struck a $2 billion deal with a fund backed by the Abu Dhabi government, which sparked dissatisfaction and opposition from Senate Democrats. Reports indicate that Trump's crypto assets account for nearly 40% of his net worth, approximately $2.9 billion, including significant shares in World Liberty Financial and the issuance of $TRUMP and $MELANIA meme coins.
White House spokesperson Anna Kelly argued that Trump's assets are managed by a trust held by his children, and there are no conflicts of interest, emphasizing Trump's commitment to making the US the 'global capital of cryptocurrency.' However, Senator Richard Blumenthal sent letters on May 6 to World Liberty Financial and Fight Fight Fight LLC (the company issuing $TRUMP meme coins), requesting communication records with the Trump family, Trump Organization, and foreign governments to investigate potential conflicts of interest.
Originally expected to have a procedural vote this week, the (GENIUS Act) has been stalled due to ethical controversies and allegations of conflicts of interest. Key members of the Banking Committee, such as Elizabeth Warren, believe the (GENIUS Act) may facilitate presidential profiteering and are calling for the Senate to reject the bill. She distributed a memo to all Democratic senators, enumerating the bill's deficiencies in terms of anti-corruption, consumer protection, financial system stability, and national security. The memo suggested that the bill should prohibit elected officials and their families from participating in stablecoin businesses to avoid conflicts of interest.
Meanwhile, Senator Jeff Merkley proposed the (Ending Crypto Corruption Act) on May 6, which prohibits the president, vice president, members of Congress, and their immediate family members from profiting from crypto assets. This bill is co-sponsored by 10 Democratic senators, including Kirsten Gillibrand and Angela Alsobrooks, who were original co-sponsors of the (GENIUS Act), highlighting deep concerns within the Democratic Party regarding Trump's crypto business.
Related reading: (WSJ: Democrats are targeting Trump's crypto empire), (Trump returns to the White House, has he made billions? The Senate is going to investigate...)
Additionally, stablecoin giant Tether is also in the crosshairs. According to two anonymous Democratic aides, Senate Minority Leader Chuck Schumer (Democrat from New York) urged colleagues not to commit to supporting the bill during a closed-door meeting on Thursday, advocating for the use of bargaining power to seek further amendments. He specifically questioned the bill's regulatory provisions regarding foreign companies like Tether. They pointed out that the (GENIUS Act) lacks strict regulation on foreign companies (such as Tether), which could open the door to money laundering and terrorist financing.
This morning, the US Senate voted 48-49 to reject the (Stablecoin Innovation and Security Act), as Democrats collectively opposed the motion to advance the bill. This bill requires 60 votes to enter the final voting procedure in the Senate, while Republicans currently hold a slim advantage of 53-47 seats. Democrats are calling for the inclusion of explicit provisions prohibiting executive officials, including former President Trump and his family members, from holding or trading cryptocurrencies, and strengthening anti-corruption provisions. Will the policy direction prioritize solidifying the dollar's hegemony or strictly prevent the transfer of interests? The path of crypto development, compounded by partisan struggles, may face more challenges in the future.
