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Crypto executives suffered a temporary (but only temporary) setback today, when a cloture vote to advance a bill setting up a light-touch regulatory regime for stablecoins failed in the Senate. Democrats decided to vote against the bill because they had not seen final text.
But this doesn’t change the widespread expectation among people close to the process that Democrats will eventually agree to the GENIUS Act, once they have a piece of paper to wave around to claim that they made improvements to the package.
Lat night, the Prospect reported, based on several sources, that Democrats had agreed to a modified version of the GENIUS Act, which would enable Big Tech firms to create their own private currencies. The main ask that Democrats secured was a vote on an amendment that would bar presidents and their families, senior executive branch officials, and members of Congress from issuing or sponsoring digital assets. This came after reports of Trump’s World Liberty Financial issuing a stablecoin, USD1, that was already being put into use by foreign countries to enrich the president’s company.
Republicans hold the majority in the Senate, and surely were not going to vote to rip away Trump’s crypto empire. After that, Democrats would supply the votes needed to avoid a filibuster and pass the bill, while saying that they did all they could to prevent Trump corruption.
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That was, and apparently still is, the deal. But the cosmetic changes being negotiated by Sens. Ruben Gallego (D-AZ) and Mark Warner (D-VA), which would also be used to justify Democratic agreement with the bill, came so late in the process that they had not been turned into legislative text. Democrats wanted a short delay to turn that around. But Senate Majority Leader John Thune (R-SD) had scheduled the cloture vote for Thursday afternoon and was unmoved by appeals to change it.
The brief debate on the Senate floor Thursday was at turns cantankerous and ridiculous. GENIUS Act co-sponsor Cynthia Lummis (R-WY) insisted that she had approved “many, many Democrat amendments” and thanked her colleagues for making the bill stronger. But she intimated that delay was not an option by actually saying this: “Just minutes ago, an American was elected Pope … America should also be leading in financial innovation.”
Sen. Bill Hagerty (R-TN), another Republican co-sponsor, tried to bully the Democrats. He argued that this is merely a cloture vote to advance to debate on the bill, which would be the only way to implement changes. A no vote on cloture, he said, would be “a vote to eliminate the crypto industry in America, and it’s a shame.”
Gallego then came out, claiming, “We’ve made some great progress over this past week” that “was done in good faith … the reason you’re hearing some hesitancy, this cannot be rushed … we need time to educate our colleagues.” He insisted that Democrats were not shutting anything down and that they had “enough members across the aisle” to pass the bill. But he asked for more time to review the language.
Specifically, Gallego wanted today’s vote for the motion to proceed to the bill to be “collapsed” with Monday’s scheduled vote to end debate on the bill. In other words, if everyone could just wait for bill text, Gallego (and presumably the other pro-crypto Democrats he spoke for) would agree to quickly rush through the bill and keep it on schedule. “This wouldn’t reduce floor time,” he said. But after asking for unanimous consent on that idea, Sen. Lummis objected.
That led to the vote, which fell mostly along party lines. Sens. Josh Hawley (R-MO) and Rand Paul (R-KY) voted against cloture along with all Democrats present. No Democrats, not even GENIUS Act co-sponsors Angela Alsobrooks (D-MD) and Kirsten Gillibrand (D-NY), voted yes.
Thune then spoke after the vote. “There have been six versions of this bill in response to demands made by Democrats … Frankly, I just don’t get it. I don’t know what more they want,” he said sharply. Thune had changed his vote to no, a procedural tactic so he can bring it up again for reconsideration “if and when Democrats are ready to get serious. Clearly today they are not.”
This is some faux anger out of Thune. He got most of what he wanted out of this process. There’s a deal in hand to eventually get a final vote once there’s legislative text. And as a bonus, he got Democrats on the record voting no en masse on a crypto bill, something that could be useful to entice crypto industry money in future Senate campaigns.
Meanwhile, Democrats didn’t want to be embarrassed by voting for something with literally no bill text. The plea for time was merely to “educate members” and show some semblance of process; it did not appear to be a substantive disagreement over the bill. Before the vote, Sen. Cory Booker (D-NJ) posted, “It is absolutely absurd that Republicans are forcing a vote today on a stablecoin bill that we have not even had an opportunity to read yet. This is no way to run the Senate, especially on legislation that has the potential to attract wide bipartisan support, including mine.”
The expectation is that this will work itself out next week, if Republicans memorialize the changes that pro-crypto Democrats secured into bill text. That seems like the likeliest scenario.
Meanwhile, the actual facts of the bill, as Corey Frayer of the Consumer Federation of America laid out this week, have not changed. Stablecoins have proven to not hold their value, do not carry deposit insurance, and are frequently used in illicit financial transactions, and the GENIUS Act isn’t a decent fix to those realities. “The bills give crypto businesses such as the president’s access to the same payment system that banks and credit card providers use while subjecting them to far weaker standards than their traditional counterparts,” Frayer wrote. And worse, they could be used to enrich connected tech firms or the president’s operation by having the government issue payments in the preferred stablecoins.
Whether Democrats will bless this conduct once it’s all written down in legislative text is what we will find out next week.
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