This week, the US Senate failed to advance a major Stablecoin regulation bill called Leader and Establishment of National Innovation for the US Stablecoins Act (Genius Act).
On May 8, Democrats united to block the bill. Of those, 49 voted against moving forward with legislation, with 48 Republican senators backing it.
Bipartisans support fractures as key Democrats reject stable laws
In particular, Reuben Gallego, Mark Warner, Lisa Blunt Rochester, Andy Kim, Kirsten Gillibrand and Angela were likewise opposed by several Democrats who previously supported or co-hosted the act of genius.
This is surprising given that the bill had previously attracted bipartisan legislative support.
Gallego and several colleagues defended their move in a joint statement, saying the proposal lacked significant safeguards.
According to them, the bill had to include money laundering anti-money laundering, stronger surveillance of foreign stable issuers, and clearer enforcement tools to ensure compliance.
They also cited national security concerns and the stability of the broader financial system among the open issues.
“We recognize that the lack of regulations leaves consumers protected and vulnerable to predatory practices. We understand that this process will be constructive, open-minded and additional improvements to the bill,” the lawmaker said.
But Republican lawmakers like Pete Ricketts criticized the vote, accusing Democrats of prioritizing political interests over policy progress.
Bohines, executive director of the Presidential Advisory Council on Digital Assets, argued that Senate Democrats missed the opportunity to enact wise reforms to boost innovation and secure the United States as a leader in financial technology.
“The bill wasn’t about politics, it wasn’t about building a future. It was about modernizing our outdated payment systems and ensuring our position as a global standard setter in financial technology. Instead, Democrats rimmed ideological sects, bringing clarity to the market and abandoning the opportunity to nurture American innovation.
Meanwhile, Bitwise Chief Investment Officer Matt Hougan called the outcome “deeply unfortunate.” He warned that the absence of clear regulations could potentially block the adoption of Stablecoin and curb market growth, particularly for Altcoins.
Hougan also noted that a regulatory stalemate could lead to an increase in volatility across non-Bitcoin assets this summer.
“If Stablecoin and market structure laws are crushed to halt in DC, it will be a long summer for non-Bitcoin crypto assets,” he pointed out.
Tether welcomes the updated Stablecoin Bill
Following the failed vote, the newly updated draft of the Genius Act has emerged with notable changes.
The new draft narrows the list of sponsors from Republican Sens. Bill Hagerty, Cynthia Ramis, Tim Scott and Dan Sullivan. Democrats Kristen Gillibrand and Angela No Angela, who previously supported the bill, have been removed from the updated version.
The latest draft expands US jurisdiction to cover foreign and ridiculous publishers like Tether who serve American users. It also improves the legal definition of digital asset service providers and updates the types of assets that can back up Stablecoins.
These changes suggest that they drive wider surveillance and increased flexibility in preliminary control.
Meanwhile, Tether CEO Paolo Aldoino has responded proactively to the revision of the bill. He said the company supports constructive regulations and looks forward to further involvement with US policymakers.
According to Ardoino, establishing a robust regulatory framework could help ensure control of the US dollar in global markets.
“We acknowledge and appreciate the efforts the administration has made to support this transformative technology legislative process. We look forward to the continued efforts of the government to legislate in a way that promotes dollar hegemony across the world,” he said.
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