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As we’ve been covering at the Prospect, the crypto industry has been angling to cash in the rewards it earned after bankrolling dozens of politicians in their 2024 campaigns. In the Senate, a handful of Democrats teed up the first effort in this payback by endorsing a bill called the GENIUS Act purportedly intended to regulate stablecoins, which are digital assets pegged to the U.S. dollar, used mostly to facilitate crypto trades.
But a funny thing happened on the way to the bill-signing ceremony. Some might call it corruption, at the highest levels of the presidency. As a result, most of those Democrats have backed off, at least for now. That includes one of the two Democratic co-sponsors of the GENIUS Act, Sen. Angela Alsobrooks (D-MD), who tells the Prospect that she supports her colleagues who are refusing to vote to advance the bill until they get further commitments on it.
So what happened here?
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At the Senate Banking Committee in March, five Democrats joined all Republicans in passing the GENIUS Act, despite concerns about weak regulatory standards that would give Big Tech firms the ability to create a lightly monitored private currency. Those pro-crypto Democrats—Sens. Ruben Gallego (D-AZ), Andy Kim (D-NJ), Mark Warner (D-VA), Lisa Blunt Rochester (D-DE), and Alsobrooks—lined up opposite Sen. Elizabeth Warren (D-MA), ranking member of the committee and perhaps the bill’s biggest critic.
The bipartisan agreement appeared to herald Senate passage, and Majority Leader John Thune (R-SD) scheduled a test vote for this week. But since the GENIUS Act passed the Banking Committee, a few things have happened.
The Justice Department disbanded its cryptocurrency enforcement team and vowed not to charge digital asset firms for violating anti–money laundering regulations. The Trump family decided to launch a stablecoin, USD1. And the United Arab Emirates is using USD1 for a $2 billion deal to purchase Binance, a digital currency exchange, in a deal funneling millions to Trump. The president’s crypto firm, World Liberty Financial, also announced a new partnership with Justin Sun, a crypto tycoon whom Trump saved from a federal securities investigation after he dumped $75 million into World Liberty tokens.
Suddenly, Democrats came around to the idea that it may not be the best time to collaborate with Republicans on a crypto package when the president is earning millions off crypto from foreign actors seeking policy favors.
Tensions started bubbling up late last week. Axios reported on a closed-door meeting where Senate Minority Leader Chuck Schumer (D-NY) asked members not to commit to passage, ostensibly to create leverage for amendments. But Schumer, a political animal, probably has some sense of how terrible the optics would look by waving through a bill involving the very vehicle Trump is using for corrupt self-dealing.
Sen. Kirsten Gillibrand (D-NY), a co-sponsor, fought to stay on course with the bill in the closed-door meeting. But on Saturday, Gallego, Kim, Blunt Rochester, and Warner released a statement with four other Democrats—Sens. Raphael Warnock (D-GA), Adam Schiff (D-CA), John Hickenlooper (D-CO), and Ben Ray Luján (D-NM)—saying that they could not support ending debate on the bill in its current form. Since the GENIUS Act needs 60 votes to get past a filibuster, the reversal by the likeliest Democratic supporters makes passage remote, at least for now.
The statement said that, while the Democratic senators support the concept, the GENIUS Act “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.” But reading between the lines, it was clearly the Trump corruption that soured them. Thune would not have teed up the bill if he didn’t think it was going to pass.
Alsobrooks was the only Banking Committee Democrat who supported the bill to not join the statement. But in response to questions from the Prospect, Alsobrooks communications director Connor Lounsbury said: “At the Committee markup, Democrats received commitments to address concerns about the bill. Those commitments should be honored, and she supports her colleagues in their efforts to further improve the bill.”
That leaves Gillibrand as the only co-sponsor and hard yes vote. Her office did not respond to a request for comment. UPDATE: Sen. Gillibrand just gave a statement to the Prospect: “I believe strongly that enacting clear stablecoin regulations should be a true bipartisan effort, and I support my colleagues’ efforts to continue to improve and strengthen this bill before it comes up for a vote in the Senate.”
Stand With Crypto, a political action committee that was active rating candidates in the 2024 cycle and informing millions of dollars of donations, just named eight “crypto champions” for the upcoming election cycle. The two Senate Democrats were Alsobrooks and Gillibrand.
Undaunted, Thune is apparently still going to force a vote on the GENIUS Act this week, Punchbowl News reported. We’ll get to see whether pro-crypto Democrats are as good as their word to deny a cloture vote.
Even if they hold, this is probably not the end of the bill. Clearly it was too hot for most pro-crypto Democrats to handle now. But when the Trump corruption stories die down, there’s always a chance that this will get dredged up again. But if you can’t pass a bill because the corruption spotlight is too bright, maybe the question should be why you want to pass it at all.
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