Senate Republicans’ efforts to advance stablecoin regulation through the GENIUS Act face increasing opposition from Democrats, jeopardizing the bill’s future amid growing national security concerns.
Quick Takes
- Nine Senate Democrats have withdrawn support for the GENIUS Act, citing insufficient protections against money laundering and national security threats.
- Republicans need at least seven Democratic votes to reach the 60-vote threshold required to advance the legislation.
- Senate Majority Leader John Thune has signaled openness to amendments, but Democrats claim substantial changes are still needed.
- The bill would create a federal framework for stablecoins, which have grown to over $240 billion in market capitalization.
- Recent crypto ventures by President Trump and his family have intensified Democrats’ concerns about the bill’s timing.
Democrats Withdraw Critical Support for Stablecoin Regulation
Nine Democratic senators have officially withdrawn support for the current version of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), throwing the future of the bill into doubt just days before Republicans planned to bring it to the Senate floor. The legislation, designed to create a comprehensive regulatory framework for stablecoins, initially had bipartisan support but now faces significant obstacles as Republicans scramble to salvage the bill ahead of Thursday’s scheduled vote.
Key Democrats who have pulled their support include Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim. Particularly noteworthy is the defection of four Democrats from the Senate Banking Committee who had initially supported the bill but now oppose the revised version. This development significantly narrows the path forward for Republicans, who need at least seven Democratic votes to reach the 60-vote threshold required to advance the legislation.
U.S. STABLECOIN BILL FACES DEMOCRATIC REVERSAL
Nine Senate Democrats have pulled support from the bipartisan GENIUS Act, citing national security, AML, and consumer protection concerns.
This surprise move threatens the bill’s progress and may delay stablecoin regulations.… pic.twitter.com/ACNUhIIyuO
— Crypto Town Hall (@Crypto_TownHall) May 4, 2025
National Security and Anti-Money Laundering Concerns Take Center Stage
Democrats have cited multiple unresolved issues with the bill, focusing primarily on national security implications and anti-money laundering provisions. The current version would allow nonbank entities to issue stablecoins with certain consumer protections in place. While the bill would require issuers to maintain 1:1 reserves in high-quality liquid assets, Democrats contend these measures don’t go far enough to protect the financial system from potential risks.
Republican leadership has expressed frustration with the late-stage opposition, noting that the bill has undergone multiple revisions based on Democratic feedback. Senate Majority Leader John Thune has indicated openness to further compromise, stating that “Changes can be made on the floor for sure” while also noting he is “waiting to see what it is Democrats are asking for.” Despite these overtures, the growing partisan divide may prove difficult to bridge.
Trump’s Crypto Ventures Complicate Political Landscape
Senator Elizabeth Warren has emerged as one of the bill’s most vocal critics, connecting her opposition to recent cryptocurrency activities by President Trump and his family. Warren has raised concerns about a significant stablecoin transaction allegedly involving entities from the United Arab Emirates, suggesting that passing the GENIUS Act now could create regulatory gaps that might be exploited for political gain or foreign influence.
Republican Senator Bill Hagerty countered these objections, urging colleagues to prioritize regulatory clarity over “partisan games.” The crypto industry has generally supported the legislation, arguing that a clear regulatory framework would enhance stablecoin adoption and maintain U.S. dollar dominance in the expanding digital economy. With stablecoins currently representing over $240 billion in market capitalization, industry leaders emphasize that the regulatory gap must be addressed to prevent the U.S. from falling behind other nations in financial innovation.
Path Forward Remains Uncertain
As Thursday’s vote approaches, Senate leadership faces mounting pressure to either modify the bill substantially or risk its defeat. Thune has signaled that Republicans have made significant concessions already, noting, “This is the sixth version of the bill … they’ve modified it each time based on feedback they’ve gotten, largely from Democrats.” Despite these changes, the bill appears increasingly unlikely to reach the necessary 60-vote threshold without further compromises.
The GENIUS Act represents the most comprehensive legislative attempt to date to regulate the growing stablecoin market, which many financial experts view as a critical bridge between traditional and digital finance. The current stalemate illustrates the difficult balance lawmakers face in fostering financial innovation while ensuring adequate consumer protections and addressing national security considerations in an increasingly complex and rapidly evolving digital economy.
Sources:
Thune Signals GOP Willing to Compromise on Stablecoin Bill as Senate Vote Nears
Stablecoins bill faces hurdle after Democrats withdraw support
Senate eyes vote on stablecoin bill despite Democratic revolt
