WASHINGTON (AP) — Senate Democrats have obstructed a bill aimed at regulating stablecoins, a type of cryptocurrency, arguing that the legislation requires stronger safeguards and expressing concerns about potential benefits for President Donald Trump.
The bill, designed to govern how stablecoin issuers operate in the U.S., had garnered some Democratic support earlier. However, it failed 49-48 in a procedural vote on Thursday after Democrats insisted on additional changes. Senate Majority Leader John Thune stated that Republicans would collaborate with Democrats if they permitted the bill to proceed, but Democrats refused, with all voting against advancing it.
This setback affects one of Trump’s key legislative priorities and represents a challenge for the cryptocurrency industry, which invested heavily in last year’s election and seeks to solidify its influence in mainstream finance. The legislation aims to establish a federal framework for regulating the stablecoin sector, currently governed by a mix of federal and state laws. Stablecoins, known for their stability due to being tied to real-world assets like the U.S. dollar or gold, have generated significant profits for major players in the crypto market.
While some Democrats acknowledge the need for regulation, Trump’s involvement in the crypto industry complicates the bill’s progress. Earlier this year, Trump launched a meme coin generating over $320 million in fees for its creators. Another Trump-associated venture, World Liberty Financial, recently announced the issuance of its own stablecoin, USD1, which received a boost from a UAE investment fund planning to use $2 billion worth of USD1 to acquire a stake in Binance, the largest cryptocurrency exchange globally.
Democrats have proposed barring elected officials and their families from owning or promoting stablecoin ventures. Senator Elizabeth Warren emphasized that the Senate should not pass legislation facilitating Trump’s corruption. Trump, once skeptical, now actively promotes a golden age for the cryptocurrency industry, with his administration taking steps to boost crypto without Congress. However, congressional approval is needed for certain priorities, including stablecoin legislation.
The bill could still progress if both parties reach an agreement. Senator Mark Warner, a Democrat involved in negotiations, remains committed to refining the legislation. A group of nine Democrats, including Warner, stated they cannot support the bill until it addresses concerns such as money laundering, foreign issuers, and accountability.
Republican Leader Thune questioned Democrats’ motives, suggesting their opposition might aim to deny Trump a bipartisan victory.
— new from AP News
