Senate Democrats Withdraw Support for Republican Stablecoin Bill

A group of Senate Democrats opposing a Republican-led stablecoin bill warns of unresolved issues, threatening to halt the legislation aimed at establishing a US regulatory framework for stablecoins. Despite previous support, nine senators underlined the need for stronger safeguards amid rising concerns. They express a commitment to working on responsible crypto regulation while criticising the Federal Reserve’s conflicting policies on stablecoins.

A coalition of Senate Democrats known for their pro-crypto stance has announced their opposition to a Republican-backed stablecoin bill unless significant changes are made. This could seriously impact the legislation aimed at creating the first regulatory framework for stablecoins in the US. According to a report from Politico on May 3, nine Democrats issued a statement highlighting concerns that the bill, introduced by Senator Bill Hagerty and called the GENIUS Act, contains unresolved issues.

The signatories of the joint statement include prominent Senators like Ruben Gallego, Mark Warner, and Lisa Blunt Rochester. Interestingly, these lawmakers had previously supported the stablecoin bill during its committee approval phase back in March. However, their newfound resistance signals a shift in sentiment, reflecting broader uncertainties within the Democratic Party regarding crypto regulation.

The Senate is gearing up to take a closer look at the stablecoin legislation soon, with the first vote likely scheduled for next week. The bill has gained traction within the crypto community as a potential leap toward much-needed regulatory clarity. Yet, the latest objections from Democrats indicate a lack of confidence in the current draft.

Despite efforts to amend the bill after committee discussions, the lawmakers stressed that those revisions were insufficient. They have called for enhanced safeguards concerning crucial areas—such as Anti-Money Laundering protocols, national security concerns, and accountability for noncompliant firms. Additional signatories to the statement include Senators Raphael Warnock, Catherine Cortez Masto, and Ben Ray Luján.

Notably, two Democratic senators who co-sponsored the initial bill, Kirsten Gillibrand and Angela Alsobrooks, did not add their names to this joint letter. The dissenting lawmakers did express a desire to work collaboratively to refine the regulations governing cryptocurrencies, aiming to find a balance that could ultimately satisfy both parties involved.

In related news, Caitlin Long, the founder and CEO of Custodia Bank, recently took the Federal Reserve to task for continuing to uphold a policy unfriendly to cryptocurrencies. She pointed out that while the Fed has loosened certain restrictions for banks, older guidelines still prevent banks from issuing stablecoins on permissionless blockchains—something she believes hampers innovation.

Long commented that the passage of a new federal stablecoin bill could potentially overturn the current Fed stance, urging Congress to act swiftly. Her remarks highlight the ongoing tension between regulatory bodies and the crypto sector, emphasizing the pressing need for comprehensive legislation that aligns with the evolving landscape of digital currencies.