Senate Democrats Near Deal to Back Stablecoin Legislation

Senate Democrats, who had previously withdrawn their support for the GENIUS Act, are now nearing a deal to back the stablecoin legislation. This shift comes after a meeting on Wednesday between key pro-crypto Democratic senators, including Ruben Gallego, Mark Warner, and Angela Alsobrooks, and their Republican counterparts. The senators had initially supported the bill but withdrew their backing on Saturday, citing concerns over the latest draft's language and perceived conflicts of interest related to President Trump's involvement in cryptocurrency ventures.

The withdrawal of support by the Democratic senators was triggered by a combination of factors, including frustration over not being consulted on the bill's language and growing concerns about President Trump's crypto-related activities. These activities include a meme coin trading under the ticker TRUMP and a DeFi project known as World Liberty Financial, which has issued its own stablecoin.

In response to the Democrats' pullback, Senate Republicans, led by Senate Majority Leader John Thune, filed for cloture on the GENIUS Act, setting a vote for Thursday. Thune had previously stated that if Democrats did not support the bill, it would indicate that digital asset and crypto legislation is solely a Republican issue.

Stablecoins, which are digital assets pegged to the U.S. dollar, play a crucial role in the crypto economy by facilitating trades and remittances. The passage of stablecoin legislation is seen as a significant step towards integrating Wall Street and banking giants into the crypto market, potentially bringing billions of new dollars. However, the legislation must first clear both the House and Senate before being signed into law.

Tensions over crypto legislation reached a peak on Tuesday when House Democrats staged a walkout of a digital assets-related hearing, citing concerns over President Trump's involvement in crypto. This raised fears among crypto policy leaders that the political landscape on Capitol Hill had shifted against their interests.

However, a meeting held on Wednesday between holdout Democratic senators and their Republican counterparts resulted in progress being made towards a compromise. The meeting, which lasted nearly four hours, included key pro-crypto Republican senators Bill Hagerty and Cynthia Lummis, as well as Senator Kirsten Gillibrand, who has not threatened to withhold her vote for the GENIUS Act.

Senate staffers are now working to translate the verbal agreements reached during the meeting into bill language that all senators involved would accept. However, it remains unclear whether the relationships between Democratic and Republican staffers are strong enough to finalize the bill in time for Thursday's cloture vote. Democrats are pushing to delay the vote until next Tuesday, but Republicans may not agree to this.

The outcome of the vote could have significant implications for the future of crypto legislation. If the bill fails to reach 60 votes due to a lack of Democratic support, there is an expectation that crypto super PACs may shift their support towards the Republican Party in the 2026 midterms.

It is also unclear what concessions Republicans made to win back the support of Democratic senators. Gallego's statement referenced areas such as anti-money laundering, foreign issuers, and national security as needing improvement in the bill. Industry players are awaiting the new language of the bill, which may include provisions targeting stablecoin giant Tether's USDT token and DeFi projects perceived as threats to U.S. foreign policy.