A bipartisan alliance backing stablecoin legislation shattered in the U.S. Senate as a key group of Democrats threatened to filibuster a bill that Republicans had hoped to pass this month — unless “numerous” fixes are made.
Senator Ruben Gallego of Arizona, a crypto-friendly freshman who backed the bipartisan bill regulating dollar-pegged cryptocurrencies in the Senate Banking Committee, led a statement May 3 from nine Democrats in the chamber warning they would filibuster the latest draft.
“The bill as it currently stands still has numerous issues that must be addressed, including adding stronger provisions on anti-money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system and accountability for those who don’t meet the act’s requirements,” the senators said.
The crypto industry had been on a roll in President Donald Trump’s Washington, with the president scaling back enforcement actions against crypto companies, appointing crypto-friendly regulators, and a bipartisan crypto-friendly coalition on Capitol Hill racing to put in place a regulatory framework long sought by the industry.
Several U.S. companies and banks are considering jumping in to stablecoins should a friendly federal regulatory regime come about. The current bill would require dollar-pegged stablecoins to be backed by assets such as short-term government debt and similar securities overseen by federal or state regulators.
Gallego and the other Democrats said they were eager to continue negotiations on the legislation in hopes of crafting a version they can support.
“We recognize that the absence of regulation leaves consumers unprotected and vulnerable to predatory practices,” they wrote.
Republican Senator Bill Hagerty of Tennessee, the lead sponsor of the bill, posted on X that there is now a choice for the Senate. “Move forward and make any remaining changes needed in a bipartisan way, or show that digital asset and crypto legislation remains a solely Republican issue,” he said.
Without reaching a deal with Gallego’s camp, which includes several members who backed an earlier draft in committee, the legislation would face a tough path to passage. Sixty votes are needed to overcome a filibuster, so Republicans would need at least seven Democratic supporters.
Top Democrats including Elizabeth Warren have charged that the bill fails to adequately protect consumers, opens the door for tech companies, Trump and Elon Musk to launch and profit off of their own coins, and would lead to demands for costly government bailouts if they fail.
Backers, including retailers, however, see stablecoins as a potential boon — providing a lower-cost alternative to existing payment systems like credit cards and checks.
