- U.S. Senate rejects GENIUS Act, stalling federal stablecoin rules as Democrats withdraw support, dealing a blow to Trump’s crypto agenda.
- Stablecoins like USDT and USDC ($160B) remain legal but unregulated, relying on fragmented state laws amid consumer risk concerns.
This Thursday, the U.S. Senate voted against advancing the GENIUS Act, a legislative proposal designed to establish federal oversight for stablecoins. The bill’s abrupt collapse followed the withdrawal of support by a bloc of Democratic senators earlier this week, despite Republican efforts to salvage it.
The GENIUS Act:
– Is the result of months of negotiations with stakeholders, experts, and members of both parties.
– Passed @BankingGOP with 5 Democrats supporting.
– Protects consumers and bolsters national security.Today’s vote wasn’t about the policy, it was about politics. pic.twitter.com/h3KwDzo5ZH
— U.S. Senate Banking Committee GOP (@BankingGOP) May 8, 2025
Falling short of the 60 votes required to proceed, the failed vote marks a setback for former President Donald Trump’s push to integrate crypto policy into his political agenda.
The White House expressed frustration over the outcome. Treasury Secretary Scott Bessent described the result as a “missed opportunity” to formalize rules for stablecoins, which are digital tokens pegged to assets like the U.S. dollar.
For stablecoins and other digital assets to thrive globally, the world needs American leadership.
The Senate missed an opportunity to provide that leadership today by failing to advance the GENIUS Act.
This bill represents a once-in-a-generation opportunity to expand dollar…
— Treasury Secretary Scott Bessent (@SecScottBessent) May 8, 2025
Bessent argued the legislation could have reinforced the dollar’s global position while addressing risks in a fast-evolving financial sector.
Republican Senator Cynthia Lummis, a vocal crypto advocate, echoed disappointment, calling the vote a “loss for clarity” in an industry she views as essential to economic growth.
My statement after the Senate failed to advance the GENIUS Act. pic.twitter.com/lARFxCPEg9
— Senator Cynthia Lummis (@SenLummis) May 8, 2025
The GENIUS Act’s failure does not ban stablecoins, which remain legal under current U.S. law. However, the absence of federal guidelines leaves companies and users operating without standardized rules, relying instead on fragmented state-level frameworks. Critics warn this could expose consumers to unchecked risks, while proponents of decentralized finance argue excessive regulation might stifle market activity.
Trump is already using his stablecoin to get a cut of a $2 BILLION deal with a shady UAE fund.
The Senate will vote on the GENIUS Act, a crypto bill which would make the President’s grift even easier.
If we don’t fix that problem, no Senator should vote for it. pic.twitter.com/hD9IaHMNMB
— Elizabeth Warren (@SenWarren) May 6, 2025
Democratic opposition centered on concerns over conflicts of interest. Senator Elizabeth Warren cited ties between the Trump family and USD1, a stablecoin linked to the former president’s business ventures, alleging the bill’s provisions could unfairly benefit private interests. Other Democrats, including some pro-crypto members, withheld support pending revisions to address gaps in accountability and transparency.
Though the bill stalled, discussions may resume. Several Democrats who previously backed the GENIUS Act signaled openness to future negotiations if amendments address unresolved issues. ETHNews analysts suggest lawmakers could revisit the topic after November’s elections, particularly if partisan shift.
Traders continue trading stablecoins like Tether (USDT) and USD Coin (USDC), which collectively hold over $160 billion in value. Without federal oversight, questions linger about how the U.S. will respond to potential crises, such as a stablecoin depegging or liquidity failure.
Senate Democrats blocked the GENIUS Act to hurt President Trump.
Instead, they hurt the country.
— Senate Republicans (@SenateGOP) May 8, 2025
The Trump administration’s stance on crypto remains unchanged, with officials reiterating support for industry growth. Still, Thursday’s vote underscores the challenges of aligning political priorities with a sector that defies traditional regulatory molds.
