Senate Democrats Shift Position, Stalling Stablecoin Legislation – Coincu

On May 5, 2025, a bipartisan group supporting stablecoin legislation in the U.S. Senate fractured when Democratic senators withdrew support. Led by Senator Ruben Gallego, these senators are now prepared to use lengthy debate procedures to block the bill.

Democrats’ withdrawal from the bill highlights growing tensions over cryptocurrency regulation, affecting both political and financial landscapes.

Democratic Senators Push for Amendments Amidst Legislative Tension

The opposition against the stablecoin bill is spearheaded by newly elected Senator Ruben Gallego from Arizona. Gallego, aligning with eight other Democratic senators, emphasizes the need for numerous amendments to the bill. Senator Gallego stated, “Our concerns must be addressed before we can support the legislation.” This discord emerged publicly on Saturday when these senators issued a statement opposing the current draft. The legislation initially received bipartisan support in the Senate Banking Committee but now faces uncertainty as Democratic senators, including Mark Warner, Lisa Blunt Rochester, and Andy Kim, have rescinded their backing.

Elizabeth Warren leads the prominent opposition against the bill, citing potential facilitation of corruption. Concerns include a recent $2B deal involving Trump-backed World Liberty Financials and Binance.

Democratic co-sponsors like Kirsten Gillibrand have not joined the opposition, indicating an ongoing divide within the party. Amidst these developments, Senator Bill Hagerty highlighted the importance of the bill’s passage, arguing for bipartisan collaboration.

Senate Republicans had aimed for the bill’s swift passage, positioning it as essential legislative progress. However, the recent resistance has impeded their plan to finalize the bill, with Gallego’s group prepared to enact filibuster tactics if necessary. Ultimately, this shift has significant ramifications for stablecoin issuers who have been awaiting federal guidance.

Market Volatility Anticipated as Political Gridlock Continues

Did you know? The current deadlock in U.S. stablecoin legislation stands in contrast to earlier bipartisan efforts to enact financial reforms, demonstrating the growing polarization within currency regulation debates.

Based on data from CoinMarketCap as of May 5, 2025, World Liberty Financial USD (USD1) has a stable price at $1.00 and a market cap of formatNumber(2127863026, 2) with an 84.13% surge in 24-hour trading volume. The 7th largest stablecoin by market cap experienced minor 24-hour price fluctuations of -0.01%. Coincu’s research highlights potential financial and regulatory challenges.

The current political stalemate could lead to increased market volatility, influencing stablecoin projects operating in regulatory ambiguity. Long-term trends may sway more legislators to reconcile differing views, paving the way for new crypto regulations.