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Despite the twists and turns and drama-creation that accompanies political media, most of the actions taken in Congress are actually pretty tightly choreographed with a foregone conclusion. First you find the votes, then you take the votes, as the saying goes. But for a minute, there was a genuinely uncertain situation happening on Capitol Hill, as a handful of Democrats who wanted to give a big gift to the crypto industry had to weigh that against one of the most obvious and insane grifts in presidential history.
Unfortunately, they opted for the big gift, while teeing up a fake stab at accountability for Trump that is designed to fail and give pro-crypto Democrats a convenient alibi.
As we reported on Monday, a bill called the GENIUS Act would set up a relatively weak regulatory framework for stablecoins, digital assets pegged to the U.S. dollar and used mostly to facilitate crypto trading. It was almost destined for success, as a significant number of crypto-friendly Democrats, boosted by campaign contributions from the industry, were all set to sign on. But then reports about Trump’s family organization launching a stablecoin, and the United Arab Emirates using it in a $2 billion deal to purchase the digital currency exchange Binance started bubbling up. Suddenly, it seemed like terrible politics for Democrats to effectively rubber-stamp Trump’s crypto corruption.
And so nine pro-crypto Democrats vowed to vote against cloture and maintain a filibuster, thus blocking the bill, without changes. Some assumed that asking to address “concerns” was just a pretext to kill the measure. Others thought that the crypto Dems were just searching for a fig leaf they could use to say that their concerns were addressed and the bill could go forward.
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It was the latter.
Sens. Ruben Gallego (D-AZ) and Mark Warner (D-VA) engaged in round-the-clock negotiations with Republicans on the GENIUS Act to get to yes. Earlier on Wednesday, Gallego told MeidasTouch that he wouldn’t let Republicans “jam us and pass bad legislation” without Democratic input. “Don’t try to fuck us on it, that’s not going to happen,” Gallego said. But the language was generally based on trying to get a “good bill” that supposedly protects consumers and investors. Gallego and Warner voted for the initial version of the GENIUS Act in the Senate Banking Committee.
Sens. Gallego and Warner did not respond to requests for comment about the negotiations.
Meanwhile, Democrats engaged in a classic tactic when they want to pass something but the optics are bad: come up with a different bill that will never pass so they can pretend they care. Sens. Chuck Schumer and Jeff Merkley introduced the End Crypto Corruption Act, which would ban the president, vice president, senior officials in the executive branch, members of Congress, and their immediate families from financially benefiting from crypto assets that they issue or endorse, including stablecoins. It’s a bill that is surely necessary in the current environment, but it will never get a passing vote from a Republican Senate, and it gives a safety valve to those Democrats who want to pass the GENIUS Act by saying that they support “ending crypto corruption.”
As a case in point, supporters of the End Crypto Corruption Act include the Democratic sponsors of the GENIUS Act, Sens. Kirsten Gillibrand (D-NY) and Angela Alsobrooks (D-MD), along with senators seen as favorable to crypto bills like Lisa Blunt Rochester (D-DE), Catherine Cortez Masto (D-NV), Andy Kim (D-NJ), Cory Booker (D-NJ), and Elissa Slotkin (D-MI).
Late on Wednesday, Democrats took a deal that will give them a standalone vote on the End Crypto Corruption Act, as an amendment to the GENIUS Act. When that fails—and it will fail, because Republicans in the majority are not going to vote to force a divestiture of their president’s crypto empire—they will proceed to a vote on the GENIUS Act.
This gives Democrats on the fence the ability to say that they tried everything they could to stop Trump corruption. But it’s completely untrue. As Sen. Merkley, who I’m sure is sincere in his effort and who wasn’t part of this deal, released a statement on Wednesday saying, “This is the right moment to have anti-corruption provisions included in the GENIUS Act.” He’s right: If Democrats were serious about ending crypto corruption, they could have made those provisions a condition of their votes on the GENIUS Act. Instead they got a worthless amendment and gave away their leverage.
“Schumer 101,” said one source with knowledge of the process.
The timing of the release of the End Crypto Corruption Act was always suspect, a Trojan horse for senators who want to pass a stablecoin bill. And it certainly did its job. The expectation is that the GENIUS Act will get final votes sometime next week, after whatever other fig leaves are in the text get memorialized in bill language.
There’s no doubt that the Trump stablecoin developments are alarming. At a Democratic-led hearing on Wednesday in the House, Revolving Door Project executive director Jeff Hauser testified that “the Founders would be alarmed by the advent of cryptocurrency” and that digital coins issued by politicians are primed for bribery, because “they afford a degree of deniability that undermines any hope for criminal accountability.”
So the need to deal with the inherent conflicts in allowing politicians to speculate personally in perhaps the most fraud-riddled financial market in human history is clear. But the way to do that for Democrats is to use the leverage they have. They didn’t.
Even some Republicans have problems with the bill. Sen. Josh Hawley (R-MO), who has often criticized Big Tech firms, has expressed concerns about potential Big Tech ownership of what amounts to a private currency. This has been a long-standing fear about the GENIUS Act, that it would potentially enable this activity. A couple of other Republicans have been noncommittal, but if enough Democrats sign on, Republicans could afford to lose a couple on their side.
The huge impact of money in politics hangs over the entire debate. Thousands of policy topics never get close to a negotiation between the parties, let alone a floor vote. The crypto industry’s effort to buy Washington opened the fast lane to get their policy preferences enacted. Even blatant corruption hasn’t stopped it. That’s the power that campaign cash affords.
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