Why the Senate Stablecoin Bill Stalled & What It Means for Crypto - Ep.832

Unknown Source May 09, 2025 28 min

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62 Companies

48 Key Quotes

2 Topics

5 Insights

🎯 Summary

Podcast Summary: Why the Senate Stablecoin Bill Stalled & What It Means for Crypto - Ep.832

This bonus episode of Unchained discusses the recent procedural failure of the Senate’s stablecoin legislation, known as the Genius Act, and analyzes the political maneuvering and policy disagreements causing the stall. Host Laura Shin is joined by Kristen Smith (CEO of the Blockchain Association) and Amanda Tumennelli (Executive Director and CLO of the DeFi Education Fund).

1. Focus Area

The primary focus is the U.S. Senate’s legislative process concerning stablecoin regulation (specifically the Genius Act), the political dynamics causing the procedural setback, and the implications for broader crypto market structure legislation.

2. Key Technical Insights

• Definition Scoping Risk: Concerns were raised regarding the definition of “Digital Asset Service Provider” (DASP) in the bill, which could inadvertently scope in and impose unworkable Anti-Money Laundering (AML) obligations on core blockchain technology components, potentially harming the underlying infrastructure.
• Need for Definitional Consistency: The experts stressed the importance of ensuring consistent definitions (e.g., for “permitted payment stablecoin”) across both the stablecoin bill and any forthcoming market structure legislation to avoid regulatory confusion in the industry.

3. Market/Investment Angle

• Process Over Perfection: The consensus is that keeping the legislative process alive is paramount, even if the initial text contains flaws, because failure to pass a simple stablecoin bill severely jeopardizes the chances of passing more complex market structure legislation later.
• Regulatory Clarity as a Precursor: Successful passage of the stablecoin bill is viewed as a critical prerequisite for establishing a foundational regulatory framework necessary for broader market structure reform to follow.
• Deadline Pressure: Congressional deadlines, such as the August recess, are powerful tools that force compromises and could ultimately drive a deal on the legislation.

4. Notable Companies/People

• The Genius Act (S. 394/S. 1582): The specific stablecoin legislation under discussion.
• Senator John Thune (R-SD): Senate Majority Leader whose “no” vote on the motion to proceed allows him to bring the motion back for reconsideration once a deal is struck.
• Senator Kirsten Gillibrand (D-NY) & Senator Angela Alsobrook (D-MD): Co-sponsors of the original committee-approved bill who are actively involved in behind-the-scenes negotiations.
• Blockchain Association & DeFi Education Fund: Industry advocacy groups actively engaging with lawmakers on the technical nuances of the bill.

5. Regulatory/Policy Discussion

• Procedural Roadblock: The vote failed because Democrats united to block the motion to proceed (which requires 60 votes to limit debate), falling short by about 12 votes. This was not a vote on the bill’s substance.
• The Two Genius Acts: Confusion arose because Republican authors introduced a new version (S. 1582) using a procedural tool (Rule 14) to incorporate changes quickly, which Democrats viewed as a process failure since they were committed to the original committee version (S. 394).
• Points of Contention: Key sticking points include:
  • Concerns over potential conflicts of interest related to Donald Trump’s family involvement in crypto businesses.
  • Republican concerns regarding Big Tech entering the stablecoin business (e.g., Facebook/Meta).
  • Technical disagreements over AML definitions and their impact on blockchain technology.
• Proposed Solutions: Democrats have proposed separate legislation (like the MIMIC Act) to address potential conflicts of interest involving elected officials, though adding such provisions could become a “poison pill” for the White House.

6. Future Implications

The experts remain cautiously optimistic that negotiations will continue, likely resuming in the coming weeks before Memorial Day or being bundled into larger end-of-year packages. The industry must remain aligned to ensure the final text protects core blockchain technology while establishing necessary regulatory guardrails. The outcome of this bill will heavily influence the feasibility of passing subsequent market structure legislation.

7. Target Audience

Crypto Policy Professionals, Blockchain Industry Executives, Lobbyists, and Institutional Investors who need to track the immediate legislative hurdles and political risks associated with U.S. stablecoin regulation.

🏢 Companies Mentioned

Facebook ✅ institution

Memorial Day ✅ unknown

Joe Biden ✅ unknown

Hunter Biden ✅ unknown

White House ✅ unknown

Elizabeth Warren ✅ unknown

Ritchie Torres ✅ unknown

Senator Murphy ✅ unknown

MIMIC Act ✅ unknown

Representative Sam McCartow ✅ unknown

Donald Trump ✅ unknown

Democratic Party ✅ unknown

Alissa Slotkin ✅ unknown

Ruben Gallego ✅ unknown

But I ✅ unknown

💬 Key Insights

"What this industry has struggled with for so long is not having consistent and clear rules. So now that we're at this moment, I am the positive spin for me is like we can have this conversation at the same time and make sure definitions are consistent across law."

Impact Score: 10

"But the advantage to them, at least being talked about at the same time is that we should have similar definitions across both bills. So if you look at the draft of market structure that was recently released, there's a definition for a permitted payment stablecoin. Shouldn't it be the case that the stablecoin bill that actually passes is the definition that can be used in market structure, right?"

Impact Score: 10

"What we don't want to do is end up passing a legislation bill that does more harm than good. We want it to be something that, you know, promotes the dollar and promotes stablecoins, but not at the expense of damaging other parts of the ecosystem."

Impact Score: 10

"There are actually two different Genius Acts. There is the Genius Act that the Senate Banking Committee marked up and voted on. . . And then there is the Genius Act that was moved to the Cloture vote. . . they introduced a new version that was only sponsored by the Republicans."

Impact Score: 10

"The way they define DAS, digital asset service provider, could scope in parts of the technology that could just never be able to comply with the AML obligations in the bill."

Impact Score: 10

"I think regardless of what the text says, even if there are flaws in the text, we want to keep the process going because if it turns out that we can't even get a simple stablecoin bill through the Senate, it's going to make it very, very difficult for a market structure to follow suit and keep the process alive."

Impact Score: 10

📊 Topics

#artificialintelligence 39 #startup 1

🧠 Key Takeaways

💡 all be able to keep doing what we have been doing

💡 be focused so much about the process

💡 be focused on trying to get the language right

💡 have similar definitions across both bills

💡 want that consistency across all of law because, you know, what this industry has struggled with for so long is not having consistent and clear rules