Senate Advances Stablecoin Bill Despite Democratic Divisions

On May 19, a significant development occurred in the US Senate as 16 Democratic senators broke party lines to pass a motion to invoke cloture on stablecoin legislation. This move set the stage for the bill to be debated on the Senate floor, despite earlier objections from some of these same senators who had withdrawn support in early May due to concerns over corruption related to President Donald Trump’s cryptocurrency dealings.

The bill, which was lightly amended, did not include provisions addressing World Liberty Financial, the Trump family’s crypto venture. This omission surprised some opponents who had initially hailed the lawmakers' refusal to support the bill. The Senate voted 66-32 to advance the legislation, highlighting the growing divide within the Democratic Party over cryptocurrencies.

Moderate Democratic Senator Mark Warner announced his support for the bill, stating that while it was not perfect, it was better than the current lack of regulation. Warner acknowledged concerns about the Trump family’s use of crypto technologies but emphasized the importance of moving forward with blockchain technology. He argued that the US should not fall behind other jurisdictions in regulating stablecoins.

Democratic Senator Kirsten Gillibrand, one of the bill’s sponsors, echoed Warner’s sentiments, stating that Trump’s corruption concerns should be addressed separately. She emphasized the need for a clear regulatory structure in the US to onshore the crypto industry. However, progressive Democrats, including Senator Elizabeth Warren, disagreed. Warren argued that a bill facilitating the president’s corruption and undermining national security, financial stability, and consumer protection was worse than no bill at all.

During the vote, Senator Michael Bennet of Colorado, who voted against the GENIUS Act, introduced another bill named “the STABLE GENIUS Act.” This bill aims to prevent the president, vice-president, and members of Congress from issuing or endorsing digital assets and requires them to place any assets they hold in a blind trust while in office. Although this bill has little chance of passing, it underscores the Democrats' split on how to provide opposition.

Progressive and activist wings of the Democratic Party have criticized Congressional leadership for compromising with Republicans on measures they claim should be deal-breakers. In March, activists were enraged when Senator Chuck Schumer voted with Republicans on a continuing resolution for government funding. In April, disagreements over how Democrats should fight Trump’s mass deportations further deepened the rift. Now, crypto has become another wedge between the activist wing and centrists in Congress.

Ezra Levin, co-founder and co-executive director of progressive activist organization Indivisible, and communications strategist Murshed Zaheed, who formally worked for the offices of Senator Harry Reid and Representative Louise Slaughter, have urged people to call their senators to come out against the bill. They argue that any Democrat who votes for this bill should not be taken seriously again if they talk about Trump’s corruption.

With the stablecoin bills in the House and Senate poised to move ahead, the Democrats seem ill-suited to mount an effective opposition. Internal struggles and interests within Congress have disunited lawmakers, while activists want a new crop of congresspeople to represent them next term. In the Democratic Party’s internal battle between the anti-crypto progressive wing and the pro-crypto pragmatists, the latter is currently winning out.