Senate Progress Halts on GENIUS Act Due to Dems' Concerns over AML and Oversight Inadequacies
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Senate Stalemate Over Stablecoins: Dems Torpedo GENIUS Act
The US Senate recently stumbled on a major stablecoin regulation bill, the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act). Political drama unfolded on May 8, as 49 Democrats united to block the bill's progress, while 48 Republicans championed it.
Senate Schism: Key Dems Abandon Stablecoin Legislation
Notably, several Democrats who had previously backed the GENIUS Act – including Ruben Gallego, Mark Warner, Lisa Blunt Rochester, Andy Kim, Kirsten Gillibrand, and Angela Alsobrooks – voted against it, surprising many. This reversal marked a shift, given the bill had previously garnered bipartisan legislative support.
Gallego and his allies defended their move in a joint statement, citing the bill's lack of critical safeguards. They argued that stronger language on anti-money laundering, more robust oversight of foreign stablecoin issuers, and clearer enforcement tools were needed to ensure compliance. Additionally, they raised national security concerns and underscored the importance of preserving the stability of the broader financial system.
"We understand the need for regulation to protect consumers from predatory practices. We have approached this process constructively, with an open mind, recognizing that further improvements to the bill would be made," the lawmakers stated.
On the other hand, Republican lawmakers like Pete Ricketts criticized the vote outcome, accusing Democrats of prioritizing political interests over policy progress.
Bo Hines, executive director of the President's Council of Advisers on Digital Assets, argued that Senate Democrats missed a chance to enact sensible reforms that would boost innovation and secure the US as a leader in financial technology.
Republicans Rip Democrats Over Stablecoin Vote
Meanwhile, Matt Hougan, Chief Investment Officer at Bitwise, called the outcome "deeply unfortunate." He warned that the absence of clear regulations could stall stablecoin adoption and suppress market growth, particularly for altcoins. Hougan also noted that a regulatory stalemate could lead to increased volatility across non-Bitcoin assets this summer.
"If stablecoin and market structure legislation grinds to a halt in DC, it's going to be a long summer for non-bitcoin crypto assets," he noted.
Tether Embraces Amended Stablecoin Bill
Following the failed vote, a newly updated draft of the GENIUS Act has emerged, with notable changes. The new draft narrows its list of sponsors to Republican Senators Bill Hagerty, Cynthia Lummis, Tim Scott, and Dan Sullivan. Democrats Kristen Gillibrand and Angela Alsobrooks, who had previously backed the bill, were removed from the updated version.
The latest draft expands US jurisdiction to cover foreign stablecoin issuers like Tether that serve American users. It also refines the legal definition of digital asset service providers and updates the types of assets that can back stablecoins, suggesting a push for broader oversight and greater flexibility in reserve management.
Tether CEO Paolo Ardoino welcomed the bill's revisions, expressing support for constructive regulation and eagerness for further engagement with US policymakers. According to Ardoino, establishing a solid regulatory framework could help secure the US dollar's dominance in global markets.
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- Senate Democrats blocked the progress of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), stalling major stablecoin regulation.
- Key Democrats like Ruben Gallego and Lisa Blunt Rochester, who previously supported the GENIUS Act, unexpectedly voted against it, leading to a shift in bipartisan legislative support.
- Gallego and his allies defended their decision, pointing to the bill's lack of critical safeguards such as strong anti-money laundering measures and robust oversight of foreign stablecoin issuers.
- Republican lawmakers criticized the Democrat's move, accusing them of prioritizing political interests over policy progress, and missing an opportunity to enact sensible reforms.
- Matt Hougan, the Chief Investment Officer at Bitwise, called the vote outcome "deeply unfortunate," warning that the absence of clear regulations could stall stablecoin adoption and suppress market growth, particularly for altcoins.
- Following the failed vote, a revised draft of the GENIUS Act has emerged, with Democrats Kristen Gillibrand and Angela Alsobrooks removed and US jurisdiction expanded to cover foreign stablecoin issuers like Tether.
- Tether CEO Paolo Ardoino welcomed the bill's revisions, expressing support for constructive regulation and eagerness for further engagement with US policymakers.
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