Senate Democrats Abandon Stablecoin Bill, Leaving It Dead in the Water

The GENIUS Act had passed the Senate Banking Committee in March with an 18-6 vote, a rare show of bipartisan support in the increasingly polarized Congress. The bill aims to create the first comprehensive federal framework for regulating stablecoins, a class of cryptocurrencies that maintain a fixed value by being pegged to assets like the U.S. dollar.

Initially supported by nine Democratic senators, including Mark Warner (D-Va.), Lisa Blunt Rochester (D-Del.), and Ruben Gallego (D-Ariz.), the bill’s progress appeared promising. But in a joint statement released, those same senators, joined by six other Democrats, announced they could no longer support the bill in its current form. They cited deficiencies in the legislation’s treatment of regulatory compliance safeguards, consumer protections, and federal oversight mechanisms.

Alex Thorn, head of research at Galaxy, posted the joint statement of the group of nine Senate Democrats on X:

Cloture, a Senate procedure required to end debate and proceed to a vote, needs 60 votes to succeed, meaning at least seven Democratic votes are necessary alongside Republican support. With these defections, the bill’s path forward is now uncertain.

The GENIUS Act is being spearheaded by Senator Bill Hagerty (R-Tenn.), who has worked closely with industry stakeholders to build a regulatory framework aimed at both legitimizing stablecoins and keeping the U.S. competitive in the digital financial sector. The bill includes provisions for federal licensing of stablecoin issuers, reserve requirements to ensure 1:1 backing, and operational standards for consumer protection.

Two prominent Democratic co-sponsors, Senator Kirsten Gillibrand (D-N.Y.) and Senator Angela Alsobrooks (D-Md.), notably did not sign the opposition statement, signaling that some Democrats remain committed to advancing the legislation with amendments.

The stablecoin debate has drawn intense interest from the crypto industry, particularly as global jurisdictions like the European Union have moved ahead with sweeping frameworks under MiCA (Markets in Crypto-Assets). U.S.-based stablecoin issuers such as Circle and Paxos have repeatedly urged Congress to act, arguing that a regulatory vacuum risks sending innovation overseas.

Meanwhile, critics from the progressive wing of the Democratic Party, including Senator Elizabeth Warren (D-Mass.), have remained staunch opponents of crypto-friendly legislation. Warren has not commented on the latest Democratic defections but has previously warned that stablecoins could undermine the financial system if not tightly regulated.

Senate Majority Leader John Thune (R-S.D.) has not yet scheduled a floor vote, but insiders say negotiations are ongoing to amend the bill and regain sufficient bipartisan support. If a compromise can be reached, the bill could still represent the most significant piece of crypto legislation to date, finally bringing stablecoins under a federal regulatory regime.

As stablecoins continue to gain traction as a low-volatility medium of exchange in both crypto and traditional finance, how the U.S. Congress chooses to regulate them could set a global precedent. For now, though, the GENIUS Act remains stalled, caught in the crossfire of political tension, regulatory caution, and competing visions for the future of digital money.