Senate Democrats Split Over Key Crypto Bill Ahead of Crucial Vote

A key crypto bill has opened a rift among Senate Democrats as another significant test approaches for the viability of legislation to regulate stablecoin issuers. Most expect the bill to clear a significant procedural vote on Monday night, but Democrats are split.

Massachusetts Democrat Elizabeth Warren, the Senate's most prominent crypto critic, is leading a faction trying to resist the bill. Warren's objections include national security threats, consumer hazards, and the corruption of a White House that's conflicted because of President Donald Trump's own digital assets business interests.

On the other hand, Senator Kirsten Gillibrand, one of the bill's primary backers, has argued that presidential conflicts are already illegal under the U.S. Constitution, and the bill doesn't need to have specific constraints added to clarify that point. Gillibrand also praises a number of changes to the legislation to improve consumer protections and to partially address worries that large corporations will issue stablecoins.

The bill is set for what's known as a cloture vote on Monday night, which will decide whether it advances into a formal and time-limited period of debate before final consideration. Cloture tends to be the most difficult test for Senate legislation, because it requires 60 votes — much more than a simple majority. A previous version of the bill failed such a vote once before, when Democrats demanded more time to make changes.

The stablecoin bill is one of two highly significant U.S. legislative efforts that will finally establish a set of rules and system of oversight for crypto in the U.S. Many in the industry believe it'll usher in a flood of interest from investors who've waited on the sidelines until the sector is completely regulated. The supporters of the stablecoin legislation have set it up for this vote, suggesting they were able to wrangle enough backers to triumph.

The current Senate bill — known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act — is worse than doing nothing, according to the arguments from the camp led by Warren. "A strong bill would ensure that consumers enjoy the same consumer protections when using stablecoins as they do when using other payment systems, close loopholes that enable the illicit use of stablecoins by cartels, terrorists, and criminals, and reduce the risk that stablecoins take down our financial system," according to a sheet issued on Monday by the committee's Democratic staff. "The GENIUS Act does not meet those minimum standards."

Gillibrand, however, said the bill has been written in a "truly bipartisan effort." "Stablecoins are already playing an important role in the global economy, and it is essential that the U.S. enact legislation that protects consumers, while also enabling responsible innovations,” the New York Democrat said in a statement last week.

Senator Mark Warner, a Virginia Democrat, also explained his view in choosing to support the bill. “It sets high standards for issuers, limits big tech overreach and creates a safer, more transparent framework for digital assets," he said in a statement. "It’s not perfect, but it’s far better than the status quo.”

In the hours before the planned Monday vote, a coalition of 46 consumer, labor and advocacy groups continued objecting to the legislation, which has been overhauled repeatedly. "A vote for this legislation would enable and condone cryptobusiness activities by the Trump administration, organization, and family that raise unprecedented concerns about presidential conflicts of interest, corruption, and the abuse of public office for private gain," they wrote in a letter to the Senate leadership.

The crypto industry itself has come together to support the legislation, with various lobbyist groups publishing statements arguing lawmakers should advance the legislation.

While the stablecoin bill has drawn some political heat, it's widely expected to be the easier of the two crypto efforts on Capitol Hill. The legislation to establish U.S. market rules for crypto is much more complex. For both bills, the House of Representatives is also working on parallel efforts.

If the bill clears cloture, it could speed toward Senate passage in a matter of days.

Warren wrote her own letter on Monday to the U.S. Department of the Treasury and the Department of Justice, pressing for answers about what's being done about North Korean hackers who stole more than a billion dollars in assets from exchange Bybit earlier this year. "These stolen assets have helped keep the regime afloat and supported continued investments in its nuclear and conventional weapons programs," Warren and Senator Jack Reed, a Rhode Island Democrat, wrote to the Treasury secretary and attorney general. "Reports suggest there are potentially thousands of North Korean-affiliated crypto hackers around the globe.”