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A group of US Senate Democrats has threatened to hold up a Republican-sponsored stablecoin bill. The group cited that the bill lacks critical protections and oversight. The move could delay efforts to pass the first US regulatory framework for stablecoins.
In a May 3 report by Politico, nine Senate Democrats declared the bill "still has several problems that need to be worked out." They threatened to vote against moving it unless sweeping changes are adopted.
The legislation, officially known as the Guiding and Establishing National Innovation for US Stablecoins or GENIUS Act, was sponsored by Senator Bill Hagerty. It cleared the Senate Banking Committee in March with bipartisan support. However, the recent Democratic pushback risks derailing its journey to become a law.
Senators Mark Warner, Raphael Warnock, Andy Kim, Lisa Blunt Rochester, Ben Ray Luján, John Hickenlooper, Ruben Gallego, and Adam Schiff were among the Democratic co-signers.
They declared, “Stronger safeguards related to Anti-Money Laundering, national security, foreign issuers, and accountability measures for noncompliant actors” must come first before the bill can move forward.
The Senate will start debating the bill in the near future, and a procedural vote could take place in the next week. Industry stakeholders see the legislation as a milestone in delivering regulatory certainty to stablecoin issuers and financial institutions.
However, there are signs of internal conflicts amplified by co-sponsors Senator Kirsten Gillibrand and Senator Angela Alsobrooks's decision not to join the Democratic opposition letter.
Despite the pushback, the senators emphasized, "We are keen to keep working with our colleagues on these matters."
Custodia Bank CEO Caitlin Long also called for expediency, stating that existing Fed guidance prevents banks from directly interacting with crypto. "Congress needs to get its act together more quickly," she said.
It remains to be seen if a consensus can be reached sooner or later. In the meantime, stablecoins will see price fluctuations until the bill is clearer.
