- The Genius Act faces a crucial procedural vote on Thursday.
- The bill would establish a framework for the $246 billion market.
- Democrats may delay vote as they seek changes.
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Sixty votes.
That’s what Senate Republicans need to muster on Thursday to move a landmark stablecoin bill a step closer to approval.
For weeks, this looked like a slam dunk.
If there was one thing Republicans, Democrats, and the crypto industry agreed on, it was the need for a statutory framework to govern dollar-pegged cryptocurrencies, which now sport a market value of $246 billion.
But over the last week, the so-called Genius Act has been thrown into doubt.
Flurry of meetings
Senate Democrats, urged on by minority leader Chuck Schumer, said they wanted big changes to the bill or they would vote against letting it move forward.
Moreover, three Republicans are wavering, too, according to an Axios report.
This means the GOP, which holds 53 seats in the Senate, probably needs to win over around 10 Democrats.
Amid a flurry of meetings on Wednesday on Capitol Hill, it looks like Senator Tim Scott, the bill’s champion, is close to securing the votes.
Still, Axios reported that Democrats may seek a delay of the so-called “cloture” vote, which would close debate and set the stage for passage.
Passing legislation is messy. And the Genius Act got very messy in the last week or so as Democrats demanded that the bill address fundamental weaknesses they said Republicans had glossed over.
This won’t be the last crypto bill considered on Capitol Hill this year.
On Monday, Republicans in the House of Representatives introduced a “market structure” bill that will finally define which digital assets are commodities and which are not.
Things get messy
This is a big deal because the Commodity Futures Trading Commission would become the designated regulator for Ethereum and its ilk, while centralised cryptocurrencies would fall under the purview of the Securities and Exchange Commission.
But that process got messy, too, when Democrats stormed out of a hearing to protest what they called Donald Trump’s crypto “corruption.”
President Trump’s willingness to blur the line between his family’s rapidly expanding crypto ventures and policymaking has given Democrats a big target and made Republicans squirm.
When World Liberty Financial, a purported DeFi project backed by Trump and his sons, launched its own stablecoin in March Democrats assailed the White House as well as Republican lawmakers for aiding and abetting a clear conflict of interest.
Last week, Democratic senators who had voted for advancing the bill out of the Senate Banking Committee balked and signalled they were now prepared to vote against it.
The group of nine Democrats led by Senator Ruben Gallego did not cite Trump in their statement of opposition.
Safety and soundness
Rather, they said the bill posed a threat to national security by not doing enough to stop bad actors from utilising dollar-backed cryptocurrencies, nor did it provide adequate provisions against money laundering.
Most poignantly, the bill, despite its name, would undermine “the safety and soundness of our financial system” by failing to set rules for how stablecoins would be integrated into banking and payments, the senators said.
Indeed, the American Bankers Association, the industry’s top trade group in Washington, expressed these concerns in a policy statement in March.
The organisation said the new framework must direct stablecoin issuers to comply with regulations on reserves, redemption, capital and liquidity, risk management, and cybersecurity.
“The need to mitigate this financial stability risk is clear,” the ABA said.
On Thursday, all eyes will be reading the fine print of how the bill has, or hasn’t, changed to accommodate bipartisan resistance.
These details will shape whether the bill passes the next major test — Senate approval.
Edward Robinson is the story editor for DL News. Contact the author at ed@dlnews.com.
