Washington’s latest attempt to regulate stablecoins—a key pillar of the cryptocurrency market—has hit a legislative wall, deepening the political divide over how the U.S. should oversee digital assets.
The bipartisan effort to pass the GENIUS Act, a bill that would create the first formal regulatory framework for U.S. dollar-pegged stablecoins, is faltering in the Senate. The collapse in talks follows a sharp rebuke by a bloc of nine Senate Democrats, who over the weekend criticized the bill’s revised version for eroding prior compromises and leaving the financial system vulnerable.
Introduced in March with bipartisan momentum, the bill had passed out of committee with support from both parties. But new Republican revisions—introduced last week—have drawn backlash for watering down anti-money laundering safeguards and offering too much flexibility to issuers with foreign backing.
Trump Family Ties Add Fuel to Democratic Resistance
Tensions reached a boiling point after media reports linked the Trump family’s World Liberty Financial stablecoin to a $2 billion deal with Abu Dhabi-based firm MGX, which plans to use the Trump-backed token to invest in Binance.
Senator Elizabeth Warren pounced on the news, warning that passing stablecoin legislation while the Trump family is expanding its financial interest in the space could create dangerous conflicts of interest.
“We cannot create the regulatory foundation of an entire financial industry when one of the biggest benefactors could be the former president and his family,” Warren said. She called for a temporary pause on all crypto-related legislation until deeper ethical reviews are conducted.
This concern resonated across the aisle. According to insiders, Majority Leader Chuck Schumer advised Democratic senators in a private meeting to withhold support unless the bill introduced stricter guardrails for stablecoin transparency and oversight of foreign-backed tokens like Tether (USDT).
Democrats Pull Support, Path Forward in Jeopardy
The response was swift. Four of the five Democrats who originally voted for the bill in committee withdrew their support, leaving the legislation short of the 60 votes required to pass.
Senator Ruben Gallego, a former co-sponsor, accused Republicans of political gamesmanship. “They know what it takes to get this bill passed. But instead of protecting consumers, they’re protecting crypto donors and foreign investors,” he said.
Meanwhile, Republicans argue that delaying stablecoin regulation creates more uncertainty and risks ceding leadership to global competitors like the EU, which has already passed MiCA, a sweeping crypto regulation framework.
Sen. Kirsten Gillibrand, one of the few Democrats still supporting the bill, remains hopeful. “We need guardrails, yes—but we also need momentum. Otherwise, this entire sector will keep evolving without any American rules,” she said in a press conference.
Negotiations continue behind the scenes, but few expect the current draft to survive without major amendments.
Stablecoins Positioned to Reshape Finance by 2030
Amid the political impasse, the market outlook for stablecoins remains overwhelmingly positive. Citigroup forecasts a 10x growth in stablecoin market cap, projecting it will balloon from $240 billion to over $2 trillion by 2030.
According to Citi, this growth will be driven by greater institutional adoption, regulatory clarity in international markets, and real-world use cases in areas like global payments, e-commerce, and financial inclusion.
The number of active wallets using stablecoins surged 53% over the past year, growing from 19.6 million to over 30 million users—a clear sign that demand is accelerating, even without a regulatory framework in place.
Without a functional U.S. policy, however, lawmakers risk losing control of a market that is increasingly shaping global monetary dynamics.
