- Senate Dem
ocrats who previously supported a Republican stablecoin bill now oppose it without significant changes.
- Democrats are calling for stronger safeguards related to anti-money laundering, national security, and accountability measures.
A group of nine Senate Democrats who previously supported cryptocurrency regulation have announced they will oppose a Republican-led stablecoin bill unless substantial changes are made, according to a May 3 report from Politico. This opposition threatens the advancement of legislation that could establish the first regulatory framework for stablecoins in the United States.
In a joint statement, the Democratic senators declared that the bill “still has numerous issues that must be addressed” and warned they would not support a procedural vote to advance the legislation without modifications. Notably, the group includes Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim, all of whom had previously backed the bill when it passed through the Senate Banking Committee in March.
The legislation in question, formally titled the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, was introduced by Senator Bill Hagerty. Despite revisions made after committee approval to address Democratic concerns, the lawmakers stated these changes were insufficient. They specifically called for stronger protections related to anti-money laundering, national security, foreign issuers, and accountability for noncompliant actors.
Senate Vote Approaches Amid Party Division
The Senate is expected to begin floor consideration of the stablecoin bill in the coming days, with the first vote potentially occurring next week. While the crypto industry has championed the bill as a landmark step toward regulatory clarity, the Democrats’ change in position reflects growing concerns within the party.
Additional signatories to the statement included Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper, and Adam Schiff. Notably absent were Senators Kirsten Gillibrand and Angela Alsobrooks, who co-sponsored the bill alongside Hagerty.
Despite their objections, the Democratic senators emphasized their willingness to continue working toward responsible crypto regulation, stating they “are eager to continue working with our colleagues to address these issues.”
Industry Push for Stablecoin Legislation
The need for stablecoin legislation has been highlighted by industry figures. On April 27, Caitlin Long, founder and CEO of Custodia Bank, criticized the US Federal Reserve for maintaining anti-crypto policies that favor big-bank-issued stablecoins while supposedly relaxing crypto partnership rules for banks.
Long explained that a January 2023 statement remains in effect that blocks banks from engaging directly with crypto assets and prohibits them from issuing stablecoins on permissionless blockchains. She noted that a federal stablecoin bill, once enacted, could override the Fed’s position, urging Congress to “hurry up” with legislation.
As the debate continues, the outcome of this legislation could significantly impact the future of stablecoin regulation in the United States.
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