The GENIUS Act, the most serious legislative attempt yet to regulate stablecoins, died in the Senate on Thursday. This landmark crypto regulation package intends to provide a comprehensive framework for the burgeoning world of digital assets. Unlike most cryptocurrencies, these assets are pegged to the value of other currencies, such as the U.S. dollar. The bill required 60 votes to advance to a final vote. It came up short, passing 48-49 on party lines. Three senators did not cast their votes.
Senator Ruben Gallego of Arizona was the leader of a coalition of nine Senate Democrats. Collectively, they withdrew their support for the GENIUS Act. This broad coalition of stakeholders raised a variety of concerns with the last version of the bill, chief among them being the issues that killed it. Those senators joining in dissent included Mark Warner of Virginia, Raphael Warnock of Georgia, and Lisa Blunt Rochester of Delaware. Interestingly, four of these senators were the same ones who had voted in favor of the GENIUS Act during committee consideration.
Senator Gallego explained their withdrawal in a thoughtful statement. They wrote that the bill as it stands does not go far enough on all of these priorities.
“While we are eager to continue working with our colleagues to address these issues, we would be unable to vote for cloture should the current version of the bill come to the floor.” – Sen. Ruben Gallego and colleagues
The bipartisan failure of the GENIUS Act leaves us wondering what stablecoin regulation will look like in the United States. The original bill would have made great strides to address anti-money laundering, foreign issuers and national security issues tied with foreign companies on our markets. Senator Gallego and his colleagues have called attention to important issues. These are all signs that we have some major editing to do in order to earn the support we need.
Treasury Secretary Scott Bessent commented on the situation, remarking that “the world is watching while American lawmakers twiddle their thumbs.” His statement underscores the sense of urgency that many stakeholders, including those who are regulated, are experiencing as it relates to regulating these digital assets.
The GENIUS Act’s defeat is an important moment in the recent battle over cryptocurrency regulation here in the U.S. As noted above, as lawmakers begin to work through the intricacies of the digital finance industry, the fate of this type of legislation in 2024 is still unclear. Key Democratic senators have withdrawn their support, underscoring the long, hilly road that lies ahead. Finding agreement on what it means to govern this extremely fast-paced industry will not be simple.
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