Senator Tim Scott Blames Partisan Politics for GENIUS Act Failure

The failure of the GENIUS Act in the U.S. Senate has sparked fierce political debate, with Senate Banking Committee Chairman Tim Scott blaming partisan tactics for halting what he called a bipartisan effort to promote stablecoin innovation.

During a Senate speech on May 8, Scott condemned Democrats for derailing the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, accusing them of prioritizing political maneuvering over policy progress.

“Instead, we witnessed a disappointing display of political gamesmanship that puts partisan politics above policy, and obstruction above innovation,” said Scott, a Republican from South Carolina. He emphasized that the legislation had undergone several rounds of amendments to address Democratic concerns, including stronger Anti-Money Laundering (AML) provisions and stricter oversight of stablecoin issuers.

Scott highlighted that the bill had initially passed through the Senate Banking Committee with bipartisan support, only to face resistance at the full Senate level. He claimed that opposition emerged under media scrutiny, motivated not by the bill’s content but by a desire to block a legislative win for former President Donald Trump.

Democratic Concerns Over Trump-Linked Stablecoin

Prominent Democrats, including Senator Elizabeth Warren, argued the GENIUS Act was tainted by potential corruption involving a Trump-linked stablecoin, USD1. On May 1, Abu Dhabi-based investment firm MGX reportedly used USD1 to settle a $2 billion investment in Binance. The token’s market cap soared from under $137 million to over $2.1 billion within a day, raising red flags.

USD1’s Market Capitalization. Source: CoinMarketCap

Warren labeled the surge as a result of a “shady crypto deal with the United Arab Emirates,” warning against passing legislation that could facilitate such activities. “The Senate shouldn’t pass a crypto bill this week to facilitate this kind of corruption,” she said.

Four of the five Democrats who had supported the GENIUS Act in committee later withdrew their support, issuing a statement on May 3 expressing discomfort with the current trajectory of stablecoin regulation. While the letter didn’t mention Trump explicitly,

Representative Maxine Waters made her opposition clear.

“If there is no effort to block the President of the United States of America from owning his stablecoin business [...] I will never be able to agree on supporting this bill,” Waters said.

Push for Stricter Crypto Oversight

In response to growing concerns, Democrats have introduced new legislation aimed at curbing conflicts of interest and corruption in the crypto sector. The Modern Emoluments and Malfeasance Enforcement (MEME) Act seeks to prevent federal officials from profiting from memecoins, while the End Crypto Corruption Act, introduced by Senators Jeff Merkley and Chuck Schumer, would ban top U.S. officials and their families from financially benefiting from crypto assets they sponsor or issue.

Merkley called the practice “a profoundly corrupt scheme” that “erodes public trust in government,” emphasizing the need to eliminate such conflicts.

Warren echoed these concerns in a statement to CBS News, saying: “The GENIUS Act will simply facilitate Trump’s crypto corruption. Both sides of the aisle should reject that.”

With the GENIUS Act stalled and new anti-corruption bills gaining momentum, the future of U.S. stablecoin legislation remains deeply entangled in political conflict.