Democrats Withdraw Support for US Stablecoin Regulation Bill
By: Isha Das
In a surprising move, nine Democratic Senators have announced they will withdraw support for the U.S. stablecoin legislation unless significant changes are made to the bill. Known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the bill passed the Senate Banking Committee in March but has since faced opposition from key Democratic supporters, potentially putting its passage into doubt.
This group of Senators, traditionally known for their pro-crypto stance, issued a statement citing unresolved issues within the bill that they believe compromise consumer protections. They have refrained from a procedural vote to advance the bill until these concerns are adequately addressed. Senators Katherine Cortez Masto, Ben Ray Luján, Raphael Warnock, and others signed the statement, urging that the bill includes stronger provisions on anti-money laundering, regulation of foreign issuers, and maintaining the integrity of the U.S. financial system.
Senator Elizabeth Warren has been a consistent critic of the GENIUS Act, sharing concerns that the current language could allow tech conglomerates to issue their own stablecoins, posing potential market disruptions. These concerns are shared by 20 community banking organizations that highlighted risks of displacing traditional deposits and exposing the financial ecosystem to novel vulnerabilities.
The GENIUS Act proposes a regulatory framework where stablecoin issuers must back tokens with U.S. Dollars or insured equivalents and can choose between federal or state oversight. Responding to the Democrats' withdrawal, Senator Bill Hagerty, who authored the Act, emphasized the necessity for cooperation across party lines to establish robust legislation securing U.S. financial leadership in digital assets. The upcoming votes and adjustments to the bill will be pivotal in determining the future direction of stablecoin regulation in the U.S.
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