U.S Senate Rejects Advancement of Bill Regulating Stablecoins under the GENIUS Act
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The proposed Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, aimed at creating a regulatory framework for stablecoins, has hit a roadblock in the U.S. Senate. The bill, which needed 60 votes to clear a cloture vote, fell short by a close margin of 48-49.
The GENIUS Act, introduced by Senator Bill Hagerty (R-TN) in February, sought to facilitate clear rules for stablecoin issuers. It would have mandated reserves to be fully backed by U.S. currency, insured deposits, or U.S. Treasury instruments like bills, notes, or bonds.
Initially receiving bipartisan support during committee reviews, the bill faced a setback when a group of Democrats raised concerns. These included the need for strengthened anti-money laundering safeguards, oversight of foreign issuers, and measures to safeguard the financial system's integrity.
According to the dissenting Democrats, "The bill as it currently stands still has numerous issues that must be addressed, including adding stronger provisions on anti-money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system, and accountability for those who don't meet the act's requirements."
Senator Ruben Gallego (D-AZ), one of the more crypto-friendly voices, admitted to discussions to reach an agreement. However, he explained that the request for more time to refine the bill was rejected by the Republicans. He emphasized his willingness to continue working on bipartisan stablecoin legislation, stating, "America must lead in this space and consumers deserve to be protected."
The Senate took the bill to a cloture vote on Thursday, which ultimately failed. Cloture votes, used to end debate and require at least 60 votes to move forward, necessitate bipartisan cooperation. As a result, the GENIUS Act is currently on hold, with no immediate path to revival.
Insight: The failure of the GENIUS Act was influenced by several factors, including concerns about potential conflicts of interest and lack of transparency surrounding the bill. Key players, such as Senator Elizabeth Warren, have raised questions about a major investment deal involving a Trump family-linked crypto firm, World Liberty Financial, which may have exacerbated opposition to the bill among Democrats. As negotiations continue, it remains to be seen whether bipartisan cooperation can be reestablished to push stablecoin legislation forward.
- The failed cloture vote for the GENIUS Act, a bill intended to establish regulatory efforts for stablecoins, was due to it only receiving 48 votes, falling short by a margin of 1.
- The Finance Business sector, including stablecoin issuers, may now face uncertainty as the bipartisan bill aimed at facilitating clear rules for their operation has been put on hold.
- Senator Ruben Gallego, known for his pro-crypto stance, has confirmed discussions to reach an agreement on the GENIUS Act, but efforts to refine the bill have reportedly been rejected by Republicans.
- With the GENIUS Act currently on hold, technology-driven financial innovations like stablecoins might face potential challenges in the U.S., underscoring the need for continued bipartisan collaboration for regulatory clarity.
