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Moves to create a regulatory framework for the US stablecoin industry have suffered a setback following a legislative defeat in the Senate.
Last week, a cloture vote on the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act failed in a 48-49 vote, with the bill falling short of the 60 votes required to advance to a floor debate.
As covered by Vixio, the bill passed out of the Senate Banking Committee in March with bipartisan support.
Introduced by Senator Bill Hagerty (R-TN), it is co-sponsored by Senator Tim Scott (R-SC), alongside Senators Cynthia Lummis (R-WY), Kirsten Gillibrand (D-NY) and Angela Alsobrooks (D-MD).
However, concerns about the Trump family’s interests in stablecoins, particularly following deals with the United Arab Emirates and Binance, prompted Democrats, rallied by Senator Elizabeth Warren (D-MA), to reject the legislation.
Posting on X ahead of the vote, Senator Warren said: “The Trump family stablecoin surged to 7th largest in the world because of a shady crypto deal with the United Arab Emirates — a foreign government that will give them a crazy amount of money.”
She added: “The Senate shouldn’t pass a crypto bill this week to facilitate this kind of corruption.”
National security concerns
Some senators also felt that the anti-money laundering (AML) and national security provisions in the bill are too weak.
Two republican senators, Josh Hawley (R-MO) and Rand Paul (R-KY), crossed the floor to vote with the Democrats against the legislation.
Although the Senate vote was a procedural one, the bill's defeat indicates that crypto legislation in the US may face more difficulties than expected.
Stablecoins offer the prospect of faster, more efficient crypto transactions and may also offer a way to ensure the dollar’s continued status as the international reserve currency.
However, their adoption has been held back by the absence of a clear regulatory framework and worries about consumer protection and financial stability.
The GENIUS ACT was intended to unlock stablecoins’ potential, but Democrat backing has gradually leached away as concerns around financial system safety, national security and potential corruption have grown.
In a statement issued before the Senate vote, ten senators said they could not support the bill in its current form.
“As stablecoins continue to grow in popularity, it is critical for Congress to work in a bipartisan fashion to create a regulatory framework that sets forth clear rules of the road. We recognise that the absence of regulation leaves consumers unprotected and vulnerable to predatory practices.”
The statement added that the 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.”
STABLE Act
Meanwhile, another piece of crypto asset legislation, the Stablecoin Transparency and Accountability For A Better Ledger Economy (STABLE) Act is continuing its passage in the House of Representatives.
Unlike the GENIUS Act, the STABLE Act is not a bipartisan piece of legislation.
The lead sponsor is Representative Bryan Steil (R-WI), chair of the Digital Assets Subcommittee, and it is co-sponsored by Representative French Hill (R-AR), chair of the House Financial Services Committee.
The bill has been strongly opposed by Democrats on both committees.
Nevertheless, the expectation had been that at some point there would be a process of reconciliation that would see the two bills come together as a meaningful piece of legislation
President Trump stated at the White House crypto summit in March 2025 that he hoped to have stablecoin legislation on his desk by August, but this now seems unlikely.
The Trump administration’s pro-crypto position is clear, and the introduction of a regulatory framework for stablecoins would create opportunities for organisations both in the crypto space and in traditional finance to operate in this area.
The failure of the GENIUS Act to pass the Senate is a setback, but hardly the end of the road.
The next step will be continued negotiations, with lawmakers from both parties having expressed continued interest in finding a path forward for stablecoin legislation.
