Is the crypto industry booming? Stablecoin bill progresses in the US Senate

The Zhitong Finance App learned that stablecoin legislation overcame the US Senate procedural blockade. After a group of Democrats dropped their opposition on Monday, it marked a major victory for the crypto industry. The industry-supported regulatory bill is currently being debated in the Senate. A bipartisan group hopes to pass the bill as early as this week, but the senators said the final vote may have to wait until after the Memorial Day of the Fallen Soldiers is adjourned.

Earlier this month, Democrats joined forces to block this legislation due to anger over President Trump's crypto deals and other concerns relating to stablecoin regulation. However, on Monday night, the Senate voted 66 to 32 to end this act of blocking the proceedings.

Crypto-friendly Democrats, led by New York State Senator Kirsten Gillibrand (Kirsten Gillibrand) and Maryland Senator Angela Alsobrooks (Angela Alsobrooks), negotiated amendments to the bill and urged their colleagues to support the bill, even if Trump did not ban profits from his family's many crypto ventures during his time in office. Stablecoins linked to the Trump family have surpassed $2 billion in market capitalization since they were announced in March, which has also sparked criticism.

But Virginia Democratic Senator Mark Warner (Mark Warner) announced Monday that he would support the measure, adding that concerns about the Trump family's commercial deal should not affect broader stablecoin legislation. Warner is an influential moderate on the Senate Banking Committee. Warner said the legislation “isn't perfect, but it's much better than the status quo.”

However, Democratic progressives, led by Democratic Party leader Elizabeth Warren (Elizabeth Warren) of the Senate Banking Committee, still strongly oppose it. Warren and Gillibrand had a heated debate in the Senate during Tuesday night's vote.

Warren released a new employee analysis attacking the bill, including the absence of any provision prohibiting Trump and his family from profiting from cryptocurrencies his administration would regulate, and an analysis of what it believes would allow criminals and terrorists to use stablecoins to trade outside of traditional banking systems.

She said, “Passing this bill means we can expect more anonymous buyers, large companies, and foreign governments to use the president's stablecoin as a shadow bank account not regulated by the government, but also as a way to make personal payments to the president. For scammers, this is a double win.”

Warren has also repeatedly warned that the bill does not have sufficient safeguards to prevent stablecoins from endangering the stability of the financial system, and that if a major stablecoin fails, systemic risks may stimulate taxpayer-funded bailout requests. Unlike traditional bank accounts, stablecoins are not protected by federal deposit insurance, and if the token fails, the holder is subject to bankruptcy proceedings.

Bankers have also expressed concerns about stablecoins absorbing bank deposits and reducing credit channels, especially for small businesses and farmers who often rely on bank loans. Bankers have been lobbying to ban commercial companies such as big tech companies or retailers from issuing their own tokens, but so far most have been unsuccessful.

However, bankers have won some key concessions, including banning stablecoins from providing interest to depositors. Coinbase CEO Brian Armstrong (Brian Armstrong) opposed the ban, and he envisioned that stablecoin accounts would eventually evolve into an alternative to bank accounts. If stablecoins are allowed to provide interest or other bonuses, this could induce more consumers to abandon banks.

Meanwhile, the industry's advocacy group “Stand With Crypto” (Stand With Crypto) said it would use the measure as a “key vote” to measure senators' stance on crypto. Some Democratic supporters of the crypto industry received $10 million worth of support through various political action committees and super political action committees, and the industry spent $40 million to help defeat Senate Banking Chairman Sherrod Brown and replace him with Republican Bernie Moreno, a wealthy entrepreneur and crypto enthusiast.

Retailers are also lobbying for the bill, hoping to profit from cheaper and faster transactions than traditional payment methods such as credit and debit cards. According to the Nielsen Report, US merchants spent more than $187 billion on credit cards last year.

The House Financial Services Committee has approved its own stablecoin measures, but has yet to pass the House of Representatives. Some House Republicans want it merged with a subsequent bill to regulate cryptocurrencies more broadly. The House and Senate must reconcile any differences on legislation before bringing the final version to Trump's desk.