U.S. Stablecoin Regulations May Be Postponed as Support from Pro-Crypto Democrats Wanes

A coalition of nine Democratic Senators has declared their intention to retract their backing for a significant U.S. stablecoin proposal unless modifications are implemented.

In a collective announcement dated May 3, they expressed concerns regarding several aspects of the current proposal known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act. The Senators emphasized their commitment to collaboration but underscored their inability to support the bill in its present form.

The statement was co-signed by Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper, and Adam Schiff. Notably, Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim, who previously supported the bill’s passage through the Senate Banking Committee in March, also joined the signatories.

Interestingly, two Senate Democrats who are co-sponsors of the GENIUS Act alongside the lead Republican sponsor, Bill Hagerty — Kirsten Gillibrand and Angela Alsobrooks — did not add their signatures to this statement.

Senate Democrats emphasize the necessity for stricter regulations within the GENIUS Act. They conveyed that it is essential for lawmakers to collaborate across party lines to define precise regulations for stablecoins, stating that a lack of such rules leaves consumers at risk.

They remain firm in their decision to withhold support for the legislation without necessary amendments. The Senators noted their willingness to engage positively, assuming that enhancements to the bill would be forthcoming.

The Democratic Senators argue that the GENIUS Act requires enhanced clauses concerning anti-money laundering, accountability for non-compliance, foreign issuers, national security, and the overall stability of the financial system.

It should be noted that opposition to the bill extends beyond these nine Senators. Senator Elizabeth Warren has been particularly vocal against the legislation, warning that it might allow large tech firms and conglomerates to issue their own stablecoins.

A group of 20 community banking representatives expressed their dissent last month, contending that the bill could undermine traditional banking deposits and introduce new risks to the financial infrastructure.

Bill Hagerty, the architect of the GENIUS Act, introduced it on February 4, 2025, with the aim of establishing a regulatory framework for U.S. payment stablecoins. Its enactment would mark a crucial milestone towards a comprehensive regulatory approach to cryptocurrency in the United States.

The proposed legislation mandates that stablecoin issuers maintain a backing of one-to-one by U.S. Dollars, insured deposits, or short-term Treasury bills. Furthermore, issuers may select either federal supervision via the Office of the Comptroller of the Currency or oversight at the state level.

The Senate Banking Committee approved the GENIUS Act in March, achieving an 18-6 vote. In response, Republicans have adjusted the bill to appeal to Democratic concerns highlighted in the recent statement.

Senate Republicans anticipated bipartisan backing for the proposal to the extent that Senate Majority Leader John Thune moved to accelerate the bill’s consideration earlier in the week, aiming for a floor vote by the end of May.

The first procedural vote on the legislation could occur as early as the following week, but the Democrats’ statement may complicate the Republicans’ strategy, potentially enabling Democrats to negotiate further concessions.

The bill requires the endorsement of at least seven Democrats to advance in the Senate.

In reaction to the Democrats’ statement, Hagerty expressed the urgency of progressing legislation to maintain the U.S. leadership in the digital asset sector, positioning it as essential for safeguarding the U.S. Dollar’s future. He remarked on the choice facing lawmakers: to move forward collaboratively or to allow digital asset legislation to become a solely Republican endeavor.