the issue
The Republican-controlled Congress is already taking action on cryptocurrency, as digital assets receive outsized attention from the White House and the industry clamors for an overhaul of current policies.
The Senate Banking Committee made its first foray last week, advancing bipartisan legislation that would create rules for stablecoins, a type of cryptocurrency pegged to assets like the US dollar. The bill, called the GENIUS Act, cleared the committee in an 18-6 vote; five Democrats voted alongside every Republican to support it.
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the bond
Among the GENIUS Act sponsors are Sens. Bill Hagerty, R-Tenn., Angela Alsobrooks, D-Md., Tim Scott, R-S.C., and Cynthia Lummis, R-Wyo. Another Democratic co-lead, Sen. Kirsten Gillibrand of New York, has long championed similar proposals, but the decision by the newly-elected Alsobrooks to join her was unexpected.
“I was really interested in making sure that we had a bill that protected consumers; also advanced innovation; and made sure that we kept it here in America, and I believe this bill is one that would help us to achieve those goals,” Alsobrooks told Semafor.
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The industry-backed legislation is far from universally supported among Democrats. During a marathon business meeting on Thursday, Senate Democrats on the Banking panel put forward numerous amendments to the bill that they said were designed to add more consumer protections, illicit finance protections, and guardrails on big tech.
Leading the charge was the committee’s top Democrat, Elizabeth Warren of Massachusetts, who warned that stablecoins could be used to facilitate terrorism financing, money laundering, and drug trafficking.
“I’m prepared to work with Democrats and Republicans on a bill that would improve consumer protection; strengthen illicit finance safeguards; and protect financial stability in this segment of the crypto market,” Warren told Semafor ahead of the markup. “The bill we’re starting with achieves none of those goals.”
Each Democratic amendment failed, with the votes falling along party lines. Republicans argued that the proposals were either beyond the bill’s scope or that the concerns underlying them had already been addressed in updates to the legislation.
Ultimately, four members of Warren’s party — Sens. Mark Warner, D-Va., Ruben Gallego, D-Ariz., Andy Kim, D-N.J., and Lisa Blunt Rochester, D-Del. — voted with Alsobrooks and Republicans to advance the legislation out of the committee.
Others who voted against the bill left open the possibility they could support it when it goes before the full Senate, if it is adjusted to their liking. “I hope this bill improves enough so that I can support it on the floor,” said Sen. Raphael Warnock, D-Ga.
Even if it succeeds in the upper chamber, however, the bill would still need to advance in the House, where Republicans have released their own proposal.
The View From the banks
The American Bankers Association, a trade association representing the banking industry, told the committee on Thursday that it welcomed changes made to it that “strengthen the proposed regulatory framework” but raised ongoing concerns with the legislation.
The organization pushed lawmakers to ensure stablecoins can’t be used to finance illegal activities and don’t lead to an erosion of the banks as intermediaries, according to its statement for the record.
Notable
- The Senate Banking Committee’s meeting on the stablecoin bill represented its first legislative vote in more than 17 months, Politico noted.
- President Donald Trump’s family crypto venture, World Liberty Financial Inc., has discussed doing business with Binance, including the possibility of creating a joint stablecoin, Bloomberg reported.