- Ten senators, including four Democrats who once backed the GENIUS Act, now oppose it due to AML and national security concerns.
- Political tensions and Trump-linked scrutiny are shifting focus away from the GENIUS Act’s core goal of stablecoin regulation clarity.
- Industry giants like Circle are urging swift regulation as the GENIUS Act aims to prevent another TerraUSD-style collapse.
According to Elearnor Terrett, Ten U.S. senators, including Ruben Gallego, have rejected the current version of the GENIUS Act, citing major concerns. These are a lack of strong anti-money laundering (AML) provisions, national security protections, and protections for the broader financial system. Four Democrats—Gallego, Warner, Kim, and Blunt Rochester—had voted for the bill earlier during the Senate Banking Committee’s March markup.
Democrat Angela Alsobrooks, one of the original co-sponsors, did not join the recent statement. Their sudden shift follows growing media scrutiny over former President Donald Trump’s alleged ties to a stablecoin venture. A recent New York Times report claimed Trump’s relatives could profit from a $2 billion stablecoin deal with a foreign fund.
Political Dynamics Cloud Regulatory Intentions
Besides national security concerns, political tensions appear to be fueling the resistance. A Senate GOP aide suggested that the opposition is less about policy and more about Trump’s growing influence. Moreover, just two days earlier, Senator John Thune launched a process to fast-track the GENIUS Act to a full Senate vote. Consequently, this rapid escalation in political and media drama has overshadowed the bill’s actual content.
The GENIUS Act seeks to bring long-overdue clarity to stablecoin regulation. It requires issuers to hold 1:1 reserves, submit to regular audits, and comply with AML rules. Additionally, it would prohibit algorithmic stablecoins like TerraUSD, which collapsed in 2022 and wiped out billions in investor funds. That collapse exposed the fragility of unregulated crypto assets and sparked widespread calls for reform.
Industry Support Highlights Regulatory Urgency
Major players like Circle, the issuer of USDC, continue to advocate for quick federal action. Hence, industry pressure for regulatory clarity is mounting. Without it, issuers face uncertainty, and institutions grow hesitant. Furthermore, clear rules build trust, which remains fragile after recent crypto failures.
This bill could establish foundational standards for stablecoins before innovation again races ahead of regulation. However, political distractions threaten that progress. The longer lawmakers debate over Trump-related optics, the more delayed consumer protection becomes.
