WASHINGTON — The Senate has voted to move forward with legislation to regulate a form of cryptocurrency called stablecoins, two weeks after Democrats blocked the measure.
Monday’s 66-32 procedural vote keeps one of President Donald Trump’s top legislative priorities on track for passage and highlights the growing political strength of the cryptocurrency industry, which spent heavily in last year’s election and has amassed a large war chest for next year’s midterms. Several Democrats reversed and voted to move forward with the legislation after negotiations with Republicans in recent days.
The fate of the legislation, which would regulate how stablecoin issuers operate in the U.S., had been uncertain in recent weeks despite early bipartisan support. Senate Democrats blocked it earlier this month in part over concerns about how Trump and his family were benefiting from private crypto endeavors, including a newly launched stablecoin.
Republicans won support from Democrats after strengthening regulations on foreign issuers, beefing up enforcement and barring large tech companies like Meta and Google from issuing their own stablecoins. The Senate will now consider the bill and could vote on final passage as soon as this week, depending on the number of amendments offered by Democrats and Republicans.
Still, Democrats were divided on the legislation. Massachusetts Sen. Elizabeth Warren and others have said the bill could help Trump enrich himself and needs stronger protections.
“Unfortunately, the final bill does nothing — nothing — to rein in the President’s crypto corruption,” Warren said ahead of the bill’s passage. She said the legislation would “accelerate Trump’s corruption by supercharging the size of the stablecoin market” and make Trump “the regulator of his own financial product.”
Negotiators added tougher ethics rules for members of Congress and the executive branch, including preventing members of Congress from issuing stablecoins. But Warren and several other Democrats said it wasn’t enough. “This Congress should be a check on the president,” Warren said.
The bill would aim to create a federal framework to regulate the stablecoin industry, which is currently governed by a patchwork of existing federal and state laws.
Stablecoins are a fast-growing corner of the cryptocurrency industry that have produced enormous profits for some of the major players involved. They offer a buffer from cryptocurrency’s notorious volatility because they are pegged to real-world assets, like U.S. dollars or gold. Typically, that means a single stablecoin is worth $1, making them a much more reliable digital asset for commercial transactions than other forms of crypto.
The move to regulate the industry has been bipartisan, but Trump’s involvement in the crypto industry complicated the legislation’s path. Trump launched a meme coin earlier this year that has generated more than $320 million in fees for its creators, according to the blockchain analysis firm Chainalysis. And he is set to attend a dinner May 22 that’s open to almost anyone who buys enough of the coins.
Another Trump-family linked crypto venture called World Liberty Financial recently announced that it was issuing its own stablecoin, called USD1. The stablecoin got a huge boost when World Liberty Financial announced last week that an investment fund in the United Arab Emirates would be using $2 billion worth of USD1 to purchase a stake in Binance, the world’s largest cryptocurrency exchange.
A former skeptic turned zealous promoter, Trump has promised to usher in a golden age for the cryptocurrency industry. His administration has already taken many early actions without Congress to boost crypto, including establishing a strategic bitcoin reserve and undoing previous enforcement actions. But Trump needs Congress to get some of his and the deep-pocketed industry’s top priorities passed, including enacting the stablecoin legislation.
Democratic supporters of the legislation argued that Congress can’t step aside just because of Trump’s involvement in the market.
“The stablecoin market has reached nearly $250 billion and the U.S. can’t afford to keep standing on the sidelines,” said Virginia Sen. Mark Warner, one of the lead Democratic negotiators on the legislation. “We need clear rules of the road to protect consumers, defend national security, and support responsible innovation.”
