TL;DR
- The U.S. Senate failed to advance the “GENIUS Act”, a bipartisan bill aimed at regulating stablecoins.
- The rejection came after Democrats withdrew their support, concerned about Donald Trump’s links to a new crypto project.
- Republicans accuse Democrats of putting political interests first, jeopardizing America’s leadership in the global crypto asset market.
The long-awaited progress of the “GENIUS Act”, legislation designed to establish clear rules on stablecoins in the U.S., came to a halt after a close Senate vote on May 8. With only 49 votes in favor, the bill fell short of the 60 needed to advance, leaving the crypto sector in a regulatory limbo.
This setback is particularly significant considering it was the first major regulatory effort to legitimize and protect the digital asset industry in the country. Moreover, international financial circles are closely watching, as a U.S. framework could have laid the groundwork for global standards, boosting investor confidence and accelerating the mass adoption of these digital assets.
Republicans Denounce Political Blockade of Crypto Progress
The shift in stance by Democratic senators came after reports emerged about Donald Trump’s connection to USD1, a stablecoin launched by World Liberty Financial, a company allegedly tied to his family, which also secured a staggering $2 billion investment from the United Arab Emirates. Democrats argue that the GENIUS Act lacked sufficient safeguards against money laundering and conflicts of interest. However, Republicans claim the rejection was a maneuver to prevent Trump from scoring a political win in the crypto space.
Senator Cynthia Lummis, known for her pro-crypto stance, expressed her “deep disappointment” at the bill’s failure, stating that the U.S. is wasting the opportunity to remain competitive against powers like China.
Meanwhile, Senator Bill Hagerty, the bill’s main sponsor, sharply criticized Democrats for unilaterally surrendering American digital leadership to the Chinese Communist Party due to fear from their party’s radical wing.
Crypto Market Reacts With Uncertainty and Resilience
Although this setback leaves stablecoin issuers without clear regulatory guidance, many analysts within the crypto ecosystem see this turbulence as yet another test of the disruptive potential of decentralized finance. Far from being discouraged, several market players believe the sector will continue to innovate and advance, regardless of Washington’s legislative pace.
Additionally, some Republican lawmakers are already planning to reintroduce the bill next week, keeping alive the possibility of reaching a consensus that, in the long run, will strengthen the market and provide security for consumers.
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