Since Trump returned to the White House, the stablecoin bill, which has been attracting much attention and can be said to be smooth sailing, has recently encountered twists and turns. The GENIUS Act or the Guidance and Establishment of a United States Stablecoin National Innovation Act is a legislation proposed by the U.S. Senate on February 4, 2025. It aims to establish a comprehensive regulatory framework for payment stablecoins in the United States to promote financial innovation, protect consumers, prevent illegal financial activities, and consolidate the dominant position of the U.S. dollar in the global financial system.
The landmark crypto bill encountered unexpected obstacles in the negotiations, with nine key Democratic senators in the Senate publicly stating on May 3 that they refused to support the revised version proposed by the Republicans last week. On May 9, the Senate rejected the Stablecoin Innovation and Security Act by a vote of 48:49, and the Democrats collectively rejected the bills advancement. The bill aims to establish the first federal regulatory framework for stablecoins pegged to the US dollar, which is one of the focuses of Trumps crypto policy.
Today, the long-running case between Ripple and the SEC finally came to an end, and its interest relationship with American political groups was also pushed into the spotlight by the Democrats, who publicly emphasized the need to ban the Trump Group from participating in cryptocurrencies. With conflicts of interest and partisan struggles, can Trump continue his previous plan to build a new crypto empire?
Political groups transfer interests, and rifts appear between the Senate and the House of Representatives
Looking back to 2024, the Senate and the House of Representatives have always been in step on crypto legislation. Last May, the House of Representatives passed the 21st Century Financial Innovation and Technology Act (FIT21) by 279 votes to 136, establishing a new regulatory framework for digital currencies. The support of 71 Democrats is enough to show the consensus of the two parties. The bill emphasizes the role of the CFTC in crypto regulation and aims to promote innovation through clear rules. Congressman Young Kim called it a new era of crypto regulation in the United States. Although the Senate has moved more slowly, it has also proposed the Lummis-Gillibrand Payment Stablecoin Act under the impetus of Senators Cynthia Lummis and Kirsten Gillibrand, attempting to set standards for stablecoins. In March of this year, the House of Representatives repealed a crypto tax rule of the Biden administration with bipartisan support, and the Senate did not explicitly oppose it. The goal of both parties is to provide legal protection for the industry while protecting investors.
The cryptocurrency industry has surged in influence thanks to last year’s successful campaign finance operations and Trump’s return to politics. If passed, the stablecoin bill would be the first major crypto reform after years of lobbying in the Senate.
However, recently, the Senate has been slow to pass a comprehensive bill similar to FIT21, and the stablecoin regulation negotiations have been hampered by opposition from key Democrats. Senate Minority Leader Chuck Schumer urged his Democratic colleagues not to commit to supporting the GENIUS Act in a closed-door meeting on May 2 to gain more room for amendments. The two houses have diverged in their attitudes towards crypto regulation, and the most direct reason is that the crypto industry is increasingly connected to political groups, and many political groups are suspected of manipulating the market for their own benefit.
The well-known lawsuit between Ripple and the U.S. Securities and Exchange Commission is a good example. On May 9, court documents showed that Ripple and the SEC had reached a settlement agreement to lift the ban imposed on Ripple by the court in August 2024, and to pay only $50 million of the $125 million civil fine to the SEC, and return the remaining $75 million to Ripple. Both parties agreed not to appeal or request the revocation of the previous judgment.
Ripples Chief Legal Officer Stuart Alderoty emphasized on social media that the case is over and called it the final update, trying to shape the companys compliance image to dispel market concerns. In addition, Ripple CEO Brad Garlinghouse announced that he would invest $2 billion in crypto industry acquisitions, shifting the focus to business expansion rather than the case itself. He also talked about the financial damage caused by the lawsuit, saying that the legal process could cause XRP holders to lose up to $15 billion in value.
Although the settlement agreement did not clarify the securities attributes of XRP, Ripple promoted XRP price fluctuations by emphasizing favorable policies and institutional cooperation. David Sacks, the crypto czar appointed by Trump, once publicly declared that Ripple won the SEC lawsuit and promoted the legitimacy of tokens such as XRP, SOL, and ADA.
Ripples compliance statement has not really promoted the legality of cryptocurrency. Its settlement with the SEC seems to cover up the deep-seated interest transfer, especially the loss of XRP holders to the lawsuit of up to $15 billion, which makes Ripple more suspected of manipulating the market. The Democratic Party questioned the interest relationship between his remarks and the crypto assets held by the Trump family. Senior Senator Richard Blumenthal launched a preliminary investigation into the possible conflicts of interest and illegal acts caused by the Trump family-related companies. The voices within the Democratic Party for a thorough investigation of crypto interest groups are getting louder and louder, which has even affected the advancement of the crypto bill.
According to TheBlock , Senate Majority Leader John Thune has submitted a motion to end debate on the stablecoin GENIUS Act (full name: the 2025 Stablecoin Innovation Act), and a key procedural vote will be held on Thursday. The bill, led by Bill Hagerty, requires that stablecoins must be 100% backed by liquid assets such as US dollars or short-term Treasury bonds. The bill needs 60 votes in favor. Currently, the Republicans hold 53 seats in the Senate and the Democrats hold 47 seats. The Republicans need to win the support of at least 7 Democrats.
On the Democratic side, nine senators including Ruben Gallego jointly signed a letter opposing the current version, demanding stronger regulation of foreign issuers and anti-money laundering clauses. Senator Richard Blumenthal has sent a letter of inquiry to Trump-related crypto company World Liberty Financial to investigate potential conflicts of interest. On the Republican side, Rand Paul criticized the over-regulation of stablecoins, while Senator Josh Hawley was concerned that tech giants would use this to issue stablecoins.
In this regard, Coinbase CEO Brian Armstrong said that this week, the (U.S.) Congress faces a good opportunity to advance stablecoin and market structure legislation. Coinbase strongly supports the Senates debate on the GENIUS Act, which requires 60 votes to reach. Coinbase also welcomes the House of Representatives efforts to continue the momentum of FIT21. If comprehensive legislation is to be passed into law before August, both the Senate and the House need to take immediate action.
What is the focus of the disagreement?
The core goal of the GENIUS Act is to establish a federal regulatory framework for stablecoins, ensure the stability of their peg to the U.S. dollar, and promote innovation in the crypto industry. The bill received bipartisan support in the Senate Banking Committee in March this year.
The core disagreement is likely to stem from Trump, the crypto president. NFT, meme coins, DeFi, stablecoins, Trump has deeply bound his personal brand with the cryptocurrency circle. The Cryptocurrency and AI Innovators dinner , which has been a hot topic in the circle recently, costs as much as $1.5 million for a single ticket.
Of course, the most ostentatious of these is his stablecoin fund project. Trump issued stablecoins through the crypto company World Liberty Financial and reached a $2 billion deal with a fund supported by the Abu Dhabi government, which aroused dissatisfaction and opposition from Senate Democrats. According to reports, Trumps crypto assets account for nearly 40% of his net worth, about $2.9 billion, including a large number of shares in World Liberty Financial and the issuance of $TRUMP and $MELANIA meme coins.
White House spokeswoman Anna Kelly argued that Trumps assets are managed by his childrens trust and there is no conflict of interest, and emphasized that Trump is committed to making the United States the global crypto capital. However, Senator Richard Blumenthal sent a letter to World Liberty Financial and Fight Fight Fight LLC (the company that issued the $TRUMP meme coin) on May 6, requesting communication records with the Trump family, the Trump Organization, and foreign governments to investigate potential conflicts of interest.
The GENIUS Act, which was expected to be voted on this week, was also shelved due to ethical disputes and conflicts of interest for the above reasons. Elizabeth Warren, the chief member of the Banking Committee, and other lawmakers believe that the GENIUS Act may facilitate the presidents profiteering and called on the Senate to veto the bill. She distributed a brief to all Democratic senators, listing the bills shortcomings in anti-corruption, consumer protection, financial system stability, and national security. The brief suggested that the bill should prohibit elected officials and their families from participating in stablecoin business to avoid conflicts of interest.
Meanwhile, Senator Jeff Merkley introduced the End Crypto Corruption Act on May 6, prohibiting the president, vice president, members of Congress and their immediate family members from profiting from crypto assets. The bill was co-signed by 10 Democratic senators, including Kirsten Gillibrand and Angela Alsobrooks, who were the original co-signers of the GENIUS Act, showing deep concerns within the Democratic Party about Trumps crypto business.
Related reading: WSJ: Democrats are eyeing Trumps crypto empire , Trump made hundreds of millions in the first 100 days since returning to the White House? The Senate is going to investigate...
In addition, stablecoin giant Tether is also targeted. According to two anonymous Democratic aides, Senate Minority Leader Chuck Schumer (D-NY) urged his colleagues in a closed-door meeting on Thursday not to commit to supporting the bill for the time being, advocating that bargaining power should be used to fight for further amendments. He particularly questioned the bills regulatory provisions for foreign companies such as Tether. They pointed out that the lack of strict supervision of foreign companies (such as Tether) in the GENIUS Act could open the door to money laundering and terrorist financing.
This morning, the U.S. Senate rejected the Stablecoin Innovation and Security Act by a vote of 48:49, and the Democrats collectively rejected the bills advancement motion. The bill requires 60 votes to enter the Senates final voting process, and the Republicans currently have only a slight advantage of 53-47 seats. Democrats demanded the inclusion of clear clauses prohibiting administrative officials, including former President Trump and his family members, from holding or trading cryptocurrencies, and strengthening anti-corruption clauses. Will the policy direction prioritize consolidating the hegemony of the U.S. dollar or strictly preventing the transfer of benefits? The development of encryption, coupled with partisan struggles, may face more challenges in the future.
