The US stablecoin bill has been rejected. Will the resumption of regulation affect the restart of the copycat season?

Written by: Ashley, Penny; BlockBeats (first on May 9)

Since Trump returned to the White House, the stablecoin bill, which has attracted much attention and can be called smooth sailing, has encountered setbacks recently. The GENIUS Act, the "Guiding and Establishing a National Innovation Act for the United States Stablecoins" is a legislation proposed by the U.S. Senate on February 4, 2025, aiming to establish a comprehensive regulatory framework for payment stablecoins in the United States to promote financial innovation, protect consumers, and prevent illegal financial activities, while consolidating the dominance of the US dollar in the global financial system.

The landmark crypto bill has encountered unexpected obstacles in consultations, with nine key Democratic senators in the House publicly refusing to support the revision proposed by the Republican Party last week. On May 9, the Senate vetoed the Stablecoin Innovation and Security Act at 48:49, and Democrats collectively rejected the bill's motion to advance. The bill aims to establish the first federal regulatory framework for stablecoins pegged to the dollar, which is one of the key points of Trump's crypto policy.

It is also today that the long-term case between Ripple and the SEC finally came to an end, and its interest relationship with the American political group was pushed to the spotlight by Democrats, who publicly emphasized the need to ban the Trump group from participating in cryptocurrencies. With conflicts of interest and party struggles, can Trump continue his previous plans and build a new crypto empire?

The political group's interests are transferred, and the Senate and the

House of Representatives have rifts

Looking back at 2024, the Senate and the House of Representatives have always been "in unanimous" in crypto legislation. Last May, the House of Representatives passed the 21st Century Financial Innovation and Technology Act (FIT21) by 279 to 136, establishing a new regulatory framework for digital currencies. The support of 71 Democrats shows the consensus between the two parties. The bill emphasizes the role of CFTC in crypto regulation, aiming to promote innovation through clear rules, which Rep. Young Kim calls "a new era of crypto regulation in the United States." Although the Senate is slow, it also proposed the Lummis-Gillibrand Payment Stablecoin Act, which attempts to set regulations for stablecoins, under the promotion of Senators Cynthia Lummis and Kirsten Gillibrand. In March this year, the House of Representatives repealed a bipartisan supporter of a Biden administration’s crypto tax rule, which the Senate did not explicitly object. Both sides’ goals were to provide legal guarantees for the industry while protecting investors.

The cryptocurrency industry has surged due to successful campaign funding operations last year and Trump’s return to politics. If passed, the stablecoin bill will become the first major crypto reform after years of lobbying by the Senate.

However, recently, the Senate has not passed a comprehensive bill similar to FIT21, and negotiations on stablecoin regulation have been hindered by opposition from key Democrats. Senate Minority Leader Chuck Schumer urged fellow Democratic Party members to not commit to support the GENIUS Act for more room for modification during a closed-door meeting on May 2. The two houses have different attitudes on crypto supervision. The most direct reason is that the crypto industry is getting closer and closer to political groups, and many political groups are suspected of manipulating the market for personal gain.

The well-known lawsuit between Ripple and the SEC is a good example. On May 9, court documents showed that Ripple and the SEC had reached a settlement agreement to lift the injunction imposed by the court in its August 2024 judgment and pay only $50 million to the SEC out of a $125 million civil fine, and the remaining $75 million is returned to Ripple. Both parties agreed not to appeal or request the revocation of the previous judgment.

Ripple Chief Legal Officer Stuart Alderoty stressed the "end of the case" on social media, saying it was the "last update" in an attempt to shape the company's compliance image to eliminate market doubts. In addition, Ripple CEO Brad Garlinghouse announced a high-profile announcement that it would invest $2 billion in crypto industry acquisitions, shifting its focus to business expansion rather than the case itself. He also spoke about the financial damage caused by the lawsuit, saying that legal proceedings could cost XRP holders up to $15 billion in value.

Although the settlement does not clarify the securities attributes of XRP, Ripple promotes XRP price fluctuations by emphasizing "policy benefits" and "institutional cooperation". Once upon a time, David Sacks, as the crypto czar appointed by Trump, also publicly claimed that "Ripple won the SEC lawsuit" and promoted the legality of tokens such as XRP, SOL, and ADA.

Ripple's "compliance statement" has not really promoted the implementation of cryptocurrency legality. Its settlement with the SEC is more like covering up the deep transfer of interests, especially XRP holders' losses of up to $15 billion in litigation, making Ripple's suspicion of market manipulation. Democrats questioned their remarks that have an interest link to the crypto assets held by the Trump family, and senior Senator Richard Blumenthal launched a preliminary investigation into possible conflicts of interest and illegal acts caused by the Trump family-related businesses. The Democratic Party’s calls for a thorough investigation of crypto interests are growing, which has even affected the advancement of the crypto bill.

According to TheBlock, Senate Majority Leader John Thune has submitted a motion to terminate the debate on the stablecoin GENIUS Act (full name of the Stablecoin Innovation Act 2025), and a key procedural vote will be held on Thursday. The bill, led by Bill Hagerty, requires stablecoins to be 100% backed by current assets such as the US dollar or short-term Treasury bonds. The bill needs to obtain 60 votes in favor. The current Senate Republicans account for 53 seats and the Democrats account for 47 seats. The Republicans need to win at least 7 Democrats’ support.

On the Democratic Party, 9 senators including Ruben Gallego signed a joint agreement to oppose the current version, demanding strengthening supervision of foreign issuers and anti-money laundering clauses. Councilman Richard Blumenthal has sent a letter of inquiry to World Liberty Financial, a Trump-affiliated crypto-maker, to investigate potential conflicts of interest. Republicans Rand Paul criticized the over-regulation of stablecoins, while Senator Josh Hawley was concerned that tech giants used it to issue stablecoins.

In response, Coinbase CEO Brian Armstrong said that this week, the (US) Congress faces a good opportunity to promote legislation on stablecoin and market structure. Coinbase strongly supports the Senate debate on the GENIUS Act, which requires 60 votes to be reached. Coinbase also welcomes the House's efforts to continue the momentum of FIT21. If comprehensive legislation is to be passed into law by August, both the Senate and the House need to take immediate action.

What is the focus of the differences?

The core goal of the GENIUS Act is to establish a federal regulatory framework for stablecoins, ensuring stability to the dollar, while promoting innovation in the crypto industry. The bill received bipartisan support from the Senate Banking Committee in March this year.

The most core difference is likely to come from Trump, the "crypto president." NFT, meme coins, DeFi, stablecoins, Trump has deeply bound his personal brand to the currency circle. The "Cryptocurrency and AI Innovator" dinner that has been buzzing in the circle recently, the single admission ticket fee has reached US$1.5 million.

Of course, the most swaggering thing here is his stablecoin fund project. Trump issued stablecoins through the crypto company World Liberty Financial and reached a $2 billion deal with Abu Dhabi government-backed funds, which sparked dissatisfaction and opposition from the Senate Democrats. Trump's crypto assets are reportedly accounting for nearly 40% of his net worth, about $2.9 billion, including a large stake in World Liberty Financial and the issuance of $TRUMP and $MELANIA meme coins.

White House spokesman Anna Kelly argued that Trump's assets are managed by his children's trust and there is no conflict of interest, and stressed that Trump's commitment to building the United States into a "global crypto capital." However, Senator Richard Blumenthal wrote to World Liberty Financial and Fight Fight LLC (the company that issues $TRUMP meme coins) on May 6, requesting a record of correspondence with the Trump family, the Trump Organization and foreign governments to investigate potential conflicts of interest.

The GENIUS Act, which was expected to hold a procedural vote this week, was also stranded due to the above reasons due to the above reasons. Members of the Banking Commission, including Elizabeth Warren, etc., believe that the GENIUS bill may encourage the president to make profits and call on the Senate to veto the bill. She distributed a newsletter to all Democratic senators, citing the bill's shortcomings in anti-corruption, consumer protection, financial system stability and national security. The newsletter suggested that the bill should prohibit elected officials and their families from participating in stablecoin business to avoid conflicts of interest.

Meanwhile, Senator Jeff Merkley introduced the End of Crypto Corruption Act on May 6, forbidding the president, vice president, members of Congress and their immediate family members from profiting from crypto assets. The bill was signed by 10 Democratic senators, including Kirsten Gillibrand and Angela Alsobrooks, who were the original co-signers of the GENIUS Act, showing deep concerns within the Democratic Party about Trump's crypto business.

In addition, stablecoin giant Tether is also the target. Senate Minority Leader Chuck Schumer (D-N.Y.) urged his colleagues to not promise support for the bill at a closed-door meeting Thursday, advocating that bargaining power should be used for further revisions. He specifically questioned the bill's regulatory provisions on foreign companies such as Tether. They noted that the GENIUS Act lacks strict regulation of foreign companies, such as Tether, could open the door to money laundering and terrorist financing.

This morning, the U.S. Senate vetoed the Stablecoin Innovation and Security Act at 48:49, and Democrats collectively rejected the bill's motion to advance. The bill requires 60 votes to enter the final Senate voting process, while the Republicans currently have a slight advantage with only 53-47 seats. Democrats have asked for clear terms to be added, prohibiting executive officials, including former President Trump and his family from holding or trading cryptocurrencies, and strengthening anti-corruption clauses. Should policy direction be given priority to consolidating the hegemony of the US dollar or strictly preventing the transfer of interests? Combined with the crypto-development path of party-competitive struggles, there may be more challenges in the future.