Partisan politics scuttled the first attempt to get a stablecoin bill passed in the Senate during a procedural vote last week. It remains to be seen if another try will be able to cut through the noise.

The GENIUS Act didn’t just fail to get the 60 votes that it needed to shut off debate and move the bill to a final vote. At 49-48, it didn’t even get the 51 votes the bill would need to pass a real vote in the Senate en route to becoming law. The procedural vote, which took place on Thursday, May 9, shows that Republicans couldn’t keep their caucus in lockstep on the bill, to say nothing of wooing back Democrats.

“I'm very disappointed that the bill didn't move forward in the Senate,” Matt Hougan, CIO of Bitwise, told The Defiant via email. “I'm hoping Washington can get its act together and figure out a way to move it forward. Stablecoins are an easy win, and should pass the Senate 100-0.”

While disappointing on its own, the vote bodes poorly for the chances of passing a broader market structure bill that the crypto industry needs to help it move into the financial mainstream, he noted.

“If we can't get this done, I think more challenging topics like market structure regulation will be very challenging,” Hougan said.

The GENIUS Act would allow both banks and non-banks in the U.S to issue “payment stablecoins” — non-yield-bearing stable cryptocurrencies designed for making transactions. The bill also defines what kind of assets can be used as reserves to back the stablecoin, and puts in place a regulatory regime for both federal and state regulators to oversee them.

Tiptoeing around partisanship

The GENIUS Act is widely seen as a relatively straightforward bill to regulate stablecoins, which President Donald Trump has made a priority, alongside broader regulations for the crypto industry. And that’s part of the problem. With Trump-affiliated World Liberty Financial issuing its own stablecoin, which now has a market capitalization north of $2 billion, Democrats have started to see the stablecoin bill as a very partisan issue.

That’s something Senate Majority Leader John Thune is trying to pare back, as can be seen in his carefully worded statement the day before the vote, putting the ball in Democrats’ hands with only very gentle partisan rhetoric, saying that he would “encourage” Democrats to help “move the ball forward.”

Adding that the “GENIUS Act is by no means the last word on digital assets,” Thune said:

“I expect the Senate will continue to work in this space, including work toward market structure legislation to address features of the crypto market that are not captured solely by stablecoins. But the GENIUS Act is a first step toward bringing digital assets into our financial system and promoting American leadership in financial innovation.”

Thune ended up being one of the three Republicans to vote against cloture on Thursday, a strategic move that gives him the chance to bring the bill back up for reconsideration.

Sen. Tim Scott, chair of the Senate Banking Committee — in which a previous version of the bill with bi-partisan sponsorship passed in March — was not so delicate. After Thursday’s vote, he accused Democrats of “Trump derangement syndrome,” implying that Democrats’ focus on the President’s crypto involvement is shooting themselves in the foot.

It does seem like Trump’s personal involvement in crypto — between Wold Liberty Financial and his official memecoin — is a key complicating factor for many lawmakers when discussing crypto regulations.

While the nine Democrats who pulled their support at the last minute cited the need for better anti-money-laundering (AML), national security and consumer protections, it is President Trump’s personal involvement with crypto in general and stablecoins in particular that many Democrats see as outright corruption, and has set their party off.

But concerns with the current bill are certainly not all Trump-focused, and not all from Democrats. One of the other three Republican Senators who voted against cloture on Thursday, Sen. Josh Hawley, cited concerns around Big Tech companies issuing stablecoins, echoing sentiment from other lawmakers across the aisle. The other, Sen. Rand Paul, told reporters he was concerned that providing a federal regime for stablecoins was unnecessary.

Just last week, reports surfaced that Meta, the company behind Facebook and Instagram, is again considering getting back into the stablecoin business. Back in 2022, Facebook’s attempts to create a stablecoin project, first launched as Libra in 2019, and then rebranded to Diem, were met with heavy pushback from regulators, who cited concerns about monetary sovereignty, among others.

Two different GENIUS Acts

The dynamics of how this relatively non-controversial bill has become partisan since passing out of committee at least in part involve recent changes to the bill, as well as the particulars of Senate voting procedure.

On May 1, just after Senate Majority Leader Thune initiated the process of expediting a vote on the bill, its original sponsor, Sen. Bill Hagerty, issued an updated version. The new version of the bill was introduced as a separate bill, S.1582 — presumably to be able to introduce changes without taking up limited Senate floor time — and has two other Republican sponsors, but no Democrats. The original bill, S.919, had Democrat Senators Angela Alsobrooks and Kirsten Gillibrand as co-sponsors.

The latest version includes changes to how foreign-issued stablecoins are treated, as well as to AML compliance and consumer protections, in response to concerns from Democrats.

After last weekend’s intensive negotiations among lawmakers around next steps for the updated bill, Thune then filed for the vote on cloture for the new bill — an effort to prevent potential filibuster and help move it to the floor and get it passed faster. However, that cloture vote is what failed on Thursday. Several Democrats reported that they hadn’t even seen the new GENIUS Act text as of the morning of the vote.

The bigger picture

Sid Powell, CEO and cofounder of Maple Finance took a longer view of the current drama around crypto regulation in Washington.

“While it’s disappointing to see the GENIUS Act stall, the fact that we got this far shows real progress,” he told The Defiant via email.

“Just a year ago, stablecoins barely registered in most policy conversations — now they’re front and center. The demand for clear, workable rules isn’t going away, and this moment could be the spark for a more collaborative effort going forward.”

Noting that the institutional appetite for onchain assets is growing very fast, he said that if the GENIUS Act does pass, “it could be a turning point for the entire industry.” He continued:

“It would give major financial institutions the confidence to engage more directly with digital assets, open the door to broader product innovation, and ultimately help position the U.S. as a global leader in financial infrastructure. Getting this right isn’t just about compliance — it’s about unlocking the next wave of real-world adoption.”

Despite the vote, Blockchain Association CEO Kristin Smith also said that she was encouraged by the bipartisan engagement on stablecoin legislation in recent months.

"While yesterday's cloture vote on the GENIUS Act is disappointing, it represents a marker on an ongoing journey, not the end of the road,” she told the Defiant on Friday.

“We urge that this debate continue in earnest and that our elected officials are reminded that the fundamental nature of stablecoin technology is both pro-consumer, providing access to 21st century financial technology, and pro-American, strengthening the global hegemony of the U.S. dollar.”

The House of Representatives has put forward its own stablecoin bill, the STABLE Act, which passed through its committee in April and is also waiting on a full vote.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.