GENIUS Act Stalls in Senate Amid Regulatory Concerns Over Stablecoins
Efforts to push forward comprehensive U.S. stablecoin legislation hit a roadblock this week as the GENIUS Act—short for Guiding and Establishing National Innovation for US Stablecoins—failed to advance in the Senate. The May 8 vote ended in a narrow 49-48 defeat, with Democratic lawmakers largely unified in opposition despite earlier bipartisan momentum.
A Sudden Shift in Support
What surprised many observers was the reversal of position by several key Democrats who had initially backed or co-sponsored the bill. Lawmakers including Ruben Gallego, Mark Warner, and Kirsten Gillibrand reversed course, citing unresolved concerns around anti-money laundering (AML), oversight of foreign stablecoin issuers, and enforcement capabilities.
In a joint statement, the group emphasized that while they recognize the need for a regulatory framework to protect consumers, the current draft fell short of addressing critical national security and financial stability risks.
“We’ve approached this process constructively and with an open mind. But without stronger safeguards, the bill does not yet meet the standards needed to protect U.S. interests,” the statement read.
Criticism from Across the Aisle
Republican lawmakers voiced frustration over the outcome. Senator Pete Ricketts accused Democrats of stalling progress for political reasons, while Bo Hines, Executive Director of the President’s Council of Advisers on Digital Assets, framed the legislation as a missed opportunity to modernize U.S. payment systems and reinforce American leadership in fintech.
“This wasn’t a partisan bill—it was a blueprint for the future. Unfortunately, ideological divisions have once again delayed meaningful progress,” Hines posted on social media.
Matt Hougan, CIO at Bitwise Asset Management, also weighed in, calling the result “deeply unfortunate.” He warned that regulatory uncertainty could discourage adoption of stablecoins and spark increased market volatility—particularly across altcoins and smaller crypto assets.
Updated Draft Signals New Direction
Despite the setback, the conversation around stablecoin oversight is far from over. An updated version of the GENIUS Act has already emerged, now backed exclusively by Republican Senators Bill Hagerty, Cynthia Lummis, Tim Scott, and Dan Sullivan. Notably, Democratic co-sponsors like Gillibrand and Angela Alsobrooks have been removed from the new version.
The revised draft introduces several key changes. It extends U.S. regulatory jurisdiction to foreign stablecoin issuers, including Tether, and clarifies the definition of digital asset service providers. It also updates the permissible assets that can be used to back stablecoins, signaling a more flexible approach to reserve management.
Tether Responds Favorably
Tether CEO Paolo Ardoino responded positively to the changes, expressing support for responsible regulation. In a statement, Ardoino emphasized the importance of U.S. leadership in the evolving digital currency space.
“We appreciate the administration’s effort to advance thoughtful regulation of this transformative technology,” he said. “Clear rules can help solidify the U.S. dollar’s global role in the digital economy.”