Senate Democrats Stall Stablecoin Bill Over Trump's Crypto Ties

Senate Democrats have expressed reluctance to advance the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (GENIUS Act), a landmark stablecoin legislation. This hesitation is largely due to concerns over President Donald Trump's increasing personal benefits from his own crypto ties. Senator Ruben Gallego, along with eight of his colleagues, warned that they would not vote to advance the current version of the bill, which requires 60 votes to proceed.

The broader implications for the crypto industry are significant, as the stablecoin bill's progress could affect forthcoming market structure legislation. This legislation, which the industry has long demanded, aims to define how the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission oversee the industry. Any delay in the stablecoin bill could threaten the progress of this broader legislation.

Two recent announcements have heightened Democrats' concerns. The first is Trump's announcement of a dinner for the top holders of his memecoin. The second is Abu Dhabi investment firm MGX's announcement that it would use the Trump family-backed World Liberty Financial's USD1 stablecoin for an investment in Binance. These developments suggest that Trump may personally benefit to the tune of hundreds of millions of dollars.

Trump has denied profiting from his crypto ventures, stating during an interview that he started his crypto ventures long before the election and that he supports crypto because it is popular and important for the U.S. to stay competitive with China. However, Democrats have been privately concerned for several days, with Senate Minority Leader Chuck Schumer warning Democrats to withhold support during a caucus meeting last week.

Senator Elizabeth Warren, who leads the Democrats on the Senate Banking Committee, was particularly vocal in her opposition. She posted on the social media site Bluesky, stating that the Senate should not pass a bill that would facilitate corruption, referring to MGX's announcement. She also co-authored a letter with Senator Jeffrey Merkley to the acting director of the U.S. Office of Government Ethics, asking for an investigation into the MGX deal.

The stalling momentum is not limited to the Senate. Representative Maxine Waters, the leading Democrat on the House Financial Services Committee, announced that she would block efforts to hold a joint hearing with the House Agriculture Committee addressing market structure issues. This move further complicates the legislative process for the stablecoin bill.

Analysts have noted that Trump's personal stake in crypto is making it difficult for Democrats to back the stablecoin bill. Despite this, some analysts predict that the bill will still pass the Senate, though possibly not this week. The crypto lobby is politically powerful and has shown a willingness to devote its considerable resources to influencing Washington, making it a significant factor in the legislative process.

Lobbyists for the crypto industry have expressed alarm over the recent developments. A joint statement published by several industry groups urged lawmakers to begin floor debate on the bill, stating that a real regulatory framework would support stablecoin adoption and dollar dominance in the digital economy. Another lobbying organization, the National Venture Capital Association, also called on the Senate to move the stablecoin bill forward, emphasizing the importance of a clear regulatory framework for stablecoins to foster innovation and strengthen America's global financial technology leadership.