US Stablecoin Legislation Faces Setback as Democratic Support Wavers

In Brief:

Nine Democratic senators have withdrawn support for the Republican-led stablecoin bill.

Concerns center around anti-money laundering, national security, and accountability gaps.

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The U.S. stablecoin regulatory framework is facing renewed uncertainty as nine Democratic senators—who previously supported crypto-friendly legislation—have announced they will no longer back the bill in its current form.

The legislation, known as the "Guiding National Innovation and Establishing Stablecoins Act" (GENIUS Act), recently passed through the Senate Banking Committee and is preparing for full Senate deliberation. However, the withdrawal of bipartisan support may stall its momentum.

Among the senators pulling their support are Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim. In a joint statement, they cited ongoing deficiencies in the bill’s language related to anti-money laundering (AML) protocols, national security safeguards, and the enforcement of accountability mechanisms for stablecoin issuers.

The GENIUS Act, introduced by Republican Senator Bill Hagerty, aims to provide the first federal framework for stablecoin issuance in the United States. It has been praised for offering regulatory clarity, which many believe is critical for innovation and growth in the digital asset space. Still, without bipartisan consensus, the bill may face delays or further amendments.

This development underscores the broader challenge of crafting crypto regulation in the U.S.—balancing innovation with risk mitigation remains a politically charged issue as the 2024 election cycle intensifies.

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