Pro-Crypto Democrats Pull Support for Stablecoin Bill at the Last Minute

Pro-Crypto Democrats Withdraw Support for Stablecoin Bill, Jeopardizing Passage

In a surprising reversal, a group of pro-crypto U.S. Senate Democrats have announced they will oppose a key stablecoin bill in its current form, significantly threatening its chances of advancing in Congress. The move comes just days before the Senate is expected to begin consideration of the legislation on the floor.

According to a May 3 report, nine Senate Democrats issued a joint statement saying the bill, despite prior revisions, “still has numerous issues that must be addressed.” They warned they would block a procedural vote to move the bill forward unless further amendments are made.

Once Supporters, Now Opponents

Among the lawmakers now opposing the bill are Senators Ruben Gallego, Mark Warner, Lisa Blunt Rochester, and Andy Kim — all of whom previously supported the measure when it passed through the Senate Banking Committee in March.

The bill, formally titled the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, was introduced by Republican Senator Bill Hagerty and co-sponsored by Democratic Senators Kirsten Gillibrand and Angela Alsobrooks, who notably did not sign the dissenting statement.

A copy of the statement. Source: Alex Thorn

The withdrawal of support reflects a growing ideological divide within the Democratic Party on how to balance innovation with regulatory oversight.

Lawmakers Cite National Security and AML Concerns

The dissenting Democrats emphasized that although some changes were made to the bill after its committee approval, those updates did not sufficiently address key concerns. Their objections include:

• Stronger Anti-Money Laundering (AML) protections

• National security safeguards

• Restrictions on foreign stablecoin issuers

• Accountability for non-compliant actors

Also signing the statement were Senators Raphael Warnock, Catherine Cortez Masto, Ben Ray Luján, John Hickenlooper, and Adam Schiff.

Despite their opposition to the current version, the senators reaffirmed their commitment to shaping responsible crypto regulation, saying they are “eager to continue working with our colleagues to address these issues.”

Industry Leaders Call for Urgency

The stalled progress comes amid mounting pressure from within the crypto industry for regulatory clarity, particularly around stablecoins. On April 27, Custodia Bank founder and CEO Caitlin Long publicly criticized the U.S. Federal Reserve for continuing to enforce what she calls an anti-crypto policy, even after easing other crypto-related guidelines.

Long pointed to a January 27, 2023, Fed policy — still in effect — that prohibits banks from issuing stablecoins on permissionless blockchains and engaging directly with crypto assets. She warned that this guidance effectively favors stablecoins issued by large traditional banks, while stifling innovation from crypto-native firms.

“Congress should hurry up,” Long said, noting that a federal stablecoin law could override the Fed’s restrictive stance and finally provide the legal clarity innovators need.

What’s Next?

The GENIUS Act was hailed by many in the crypto sector as a potential breakthrough in U.S. crypto regulation, particularly in providing a clear framework for stablecoin issuance and compliance. However, the sudden opposition from previously supportive Democrats now casts doubt on whether the bill can pass in its current form.

With a Senate vote expected in the coming week, lawmakers must move quickly to either revise the bill or risk stalling progress on what could have been a landmark step forward for U.S. crypto policy.