Since his return to the White House, Trump has been closely watched and enjoyed a relatively smooth ride with the Stablecoin Act, but it recently hit a snag. The "GENIUS Act," or the "Guidance and Engagement in National Innovation of U.S. Stablecoins Act," is a piece of legislation introduced by the U.S. Senate on February 4, 2025. It aims to establish a comprehensive regulatory framework for "payment stablecoins" within the United States to promote financial innovation, protect consumers, combat illegal financial activities, and strengthen the dominance of the U.S. dollar in the global financial system.

This milestone cryptocurrency bill encountered an unexpected obstacle during negotiations, with nine key Democratic senators in the Senate publicly stating on May 3 that they refused to support the revised version proposed by the Republicans last week. On May 9, the Senate rejected the "Stablecoin Innovation and Security Act" with a vote of 48:49, as Democratic members collectively blocked the advancement of the bill. This bill aimed to establish the first federal regulatory framework for stablecoins pegged to the U.S. dollar, which was a key focus of Trump's crypto policy.

Also today, the long-running case between Ripple and the SEC finally came to a close, and its ties to the American political group were thrust into the spotlight by the Democrats, who emphasized the need to ban the Trump group from participating in cryptocurrency. With conflicting interests and partisan struggles, can Trump continue his previous plans to build a new crypto empire?

Political Group Interest Transmission Creates Cracks in Both Houses

Looking back at 2024, both houses of Congress had been relatively "in sync" on crypto legislation. In May of last year, the House of Representatives passed the "21st Century Financial Innovation and Technology Act" (FIT21) with a vote of 279 to 136, establishing a new regulatory framework for digital currencies. With the support of 71 Democrats, bipartisan consensus was evident. The bill emphasized the role of the CFTC in crypto regulation, aiming to promote innovation through clear rules. Representative Young Kim called it a "new era of U.S. crypto regulation." While the Senate moved more slowly, Senators Cynthia Lummis and Kirsten Gillibrand proposed the "Lummis-Gillibrand Payment Stablecoin Act" in an attempt to establish standards for stablecoins. In March of this year, the House of Representatives repealed a Biden administration cryptocurrency tax rule with bipartisan support, while the Senate did not expressly oppose, with both sides aiming to provide legal protection for the industry and investors.

Due to last year's successful fundraising and Trump's return to politics, the cryptocurrency industry's influence has surged. If this stablecoin bill is passed, it will become the first major crypto reform in the Senate after years of lobbying.

However, recently, the Senate has failed to pass a comprehensive bill similar to FIT21, and stablecoin regulation negotiations have been stalled due to key Democratic opposition. Senate Minority Leader Chuck Schumer urged Democratic colleagues in a closed-door meeting on May 2 to refrain from committing to support the "GENIUS Act" to allow for more room for amendments. There is a divergence in the two chambers' attitudes toward crypto regulation, with the most direct reason being the increasingly close ties between the crypto industry and political groups, with many political groups suspected of market manipulation for personal gain.

The well-known lawsuit between Ripple and the U.S. Securities and Exchange Commission is a prime example. On May 9, court documents revealed that Ripple and the SEC had reached a settlement agreement, intending to lift the injunction imposed on Ripple in August 2024 by the court and to pay only $50 million of the $125 million civil fine to the SEC, with the remaining $75 million returned to Ripple. The parties agreed not to appeal further and not to seek the dismissal of the prior judgment.

Ripple's Chief Legal Officer Stuart Alderoty emphasized "case closed" on social media and described it as the "final update," seeking to shape the company's compliance image to dispel market doubts. In addition, Ripple CEO Brad Garlinghouse made a high-profile announcement to invest $2 billion in crypto industry acquisitions, shifting the focus to business expansion rather than the case itself. He also mentioned the financial damage caused by the lawsuit, stating that the legal proceedings could have resulted in up to a $15 billion loss in value for XRP holders.

Although the settlement agreement did not explicitly state XRP's security status, Ripple drove XRP price volatility by emphasizing "policy favorability" and "institutional cooperation." Previously, David Sacks, appointed as the crypto czar by Trump, publicly claimed that "Ripple won the SEC lawsuit" and promoted the legitimacy of tokens such as XRP, SOL, and ADA.

Ripple's longstanding "compliance statement" has not actually advanced the legalization of cryptocurrencies. Its settlement with the SEC appears to have masked underlying interest transfers, especially with XRP holders facing losses of up to $15 billion due to the lawsuit, deepening suspicions of Ripple market manipulation. Democrats have questioned its statements and the potential ties between the Trump family's crypto assets. Senior Senator Richard Blumenthal has initiated a preliminary investigation into potential conflicts of interest and illegal activities related to the Trump family's relevant businesses. The demand within the Democratic Party for a thorough investigation into crypto interest groups is rising, even impacting the progress of crypto-related bills.

According to TheBlock, Senate Majority Leader John Thune has moved to end debate on the Stablecoin "GENIUS Act" (officially known as the "2025 Stablecoin Innovation Act") and a crucial procedural vote will take place on Thursday. The bill, led by Bill Hagerty, requires stablecoins to be 100% backed by US dollars or other liquid assets such as short-term Treasury securities. The bill needs 60 votes in favor, with the current Senate Republicans holding 53 seats and Democrats holding 47 seats, requiring at least 7 Democratic votes to support it.

On the Democratic side, 9 senators including Ruben Gallego co-signed a letter opposing the current version, calling for stronger oversight of foreign issuers and anti-money laundering provisions. Senator Richard Blumenthal has sent an inquiry letter to Trump-affiliated crypto company World Liberty Financial, investigating potential conflicts of interest. On the Republican side, Rand Paul criticized excessive stablecoin regulation, while Senator Josh Hawley expressed concerns about big tech companies issuing stablecoins.

In response, Coinbase CEO Brian Armstrong stated that this week presents an opportunity for Congress to advance stablecoin and market structure legislation. Coinbase strongly supports the Senate's debate on the "GENIUS Act," which requires 60 votes to pass. Coinbase also welcomes the House's efforts to continue the momentum of FIT21. If comprehensive legislation is to become law before August, both chambers of Congress need to act immediately.

What is the Focus of the Divide?

The core aim of the "GENIUS Act" is to establish a federal regulatory framework for stablecoins, ensuring their stability pegged to the US dollar while fostering innovation in the crypto industry. The bill received bipartisan support in the Senate Banking Committee in March this year.

The most significant point of contention likely stems from former President Trump, known as the "Crypto President." NFTs, meme coins, DeFi, and stablecoins have all been deeply intertwined with Trump's personal brand in the crypto space. The recent buzz-worthy "Cryptocurrency & AI Innovators" gala saw individual tickets priced as high as $1.5 million.

Of course, the most flashy of all is his stablecoin fund project. Trump issued a stablecoin through the crypto company "World Liberty Financial" and engaged in a $2 billion deal with a fund supported by the Abu Dhabi government, sparking dissatisfaction and opposition from Senate Democrats. Reportedly, Trump’s crypto assets account for nearly 40% of his net worth, about $29 billion, including a significant stake in World Liberty Financial and the issuance of $TRUMP and $MELANIA meme coins.

White House spokesperson Anna Kelly argued that Trump's assets are managed by his children's trust, and there is no conflict of interest, emphasizing Trump's commitment to making the United States the "global capital of crypto." However, Senator Richard Blumenthal wrote to World Liberty Financial and Fight Fight Fight LLC (the company issuing $TRUMP meme coin) on May 6, requesting communication records related to the Trump family, Trump Organization, and foreign governments to investigate potential conflicts of interest.

The "GENIUS Act," which was expected to undergo a procedural vote this week, has been stalled due to moral controversy and conflict-of-interest accusations. Elizabeth Warren, Chief Member of the Banking Committee, and other Democratic Senators believe that the "GENIUS Act" may benefit the president and have called on the Senate to reject the bill. She distributed a briefing to all Democratic senators, listing the inadequacies of the bill in anti-corruption, consumer protection, financial system stability, and national security. The briefing suggests that the bill should prohibit elected officials and their families from participating in stablecoin businesses to avoid conflicts of interest.

Meanwhile, on May 6, Senator Jeff Merkley introduced the "End Cryptocurrency Corruption Act," which prohibits the president, vice president, members of Congress, and their immediate family members from benefiting from cryptocurrency assets. The bill received endorsements from 10 Democratic senators, including Kirsten Gillibrand and Angela Alsobrooks, who were original signatories of the "GENIUS Act," demonstrating deep concerns within the Democratic Party regarding Trump's crypto business.

Related Reading: "WSJ: Democrats Target Trump's Crypto Empire" and "Did Trump Return to the White House Rich After One Hundred Days? Senate Wants to Investigate..."

In addition, the stablecoin giant Tether is also in the crosshairs. According to two anonymous Democratic aides revealed, Senate Minority Leader Chuck Schumer (D-N.Y.) urged colleagues during a closed-door meeting on Thursday not to commit to supporting the bill, advocating for leveraging bargaining power to seek further amendments. He particularly questioned the regulatory provisions of the bill concerning foreign companies like Tether. They pointed out that the "GENIUS Act" lacks stringent regulation of foreign companies (such as Tether), potentially opening the door to money laundering and terrorist financing.

This morning, the U.S. Senate rejected the "Stablecoin Innovation and Security Act" in a 48-49 vote, with Democrats collectively blocking a motion to proceed with the bill. This bill required 60 votes to advance to the Senate's final vote, and Republicans currently hold a slim 53-47 majority. Democrats demanded specific provisions to prohibit executive branch officials, including former President Trump and his family members, from holding or trading cryptocurrencies and to strengthen anti-corruption clauses. Will the policy direction prioritize consolidating the dominance of the U.S. dollar or staunchly guard against conflicts of interest? Coupled with the partisan struggle along the path of crypto development, the future may face even more challenges.

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