WASHINGTON (AP) – The Senate has taken steps to advance legislation regulating a type of cryptocurrency known as stablecoins, just two weeks after Democrats blocked the major initiative.
One of President Donald Trump’s key objectives is on track for approval with a procedural vote of 66-32 on Monday. Political backing for the cryptocurrency sector has increased as it invested heavily in last year’s elections and amassed substantial war chests for the upcoming midterms. A number of Democrats supported the bill’s progression following recent discussions with Republicans.
The outcome of the legislation, which governs the operations of stablecoin publishers in the United States, has been uncertain in recent weeks despite prior bipartisan backing. Senate Democrats had previously stalled it over concerns regarding the ways in which Trump and his family could benefit from private crypto initiatives, including the newly launched stablecoin.
Republicans have received support from Democrats after tightening regulations on foreign publishers, enhancing enforcement measures, and prohibiting large tech firms like Meta and Google from creating their own stablecoins. The Senate is now poised to deliberate on the bill, with a final vote expected later this week, contingent upon the number of amendments proposed by both parties.
However, the Democrats remain divided on the legislation. Senator Elizabeth Warren of Massachusetts and others argued that the bill could allow Trump to profit at the expense of necessary protections.
“Unfortunately, the final bill does nothing — absolutely nothing — to address the president’s code corruption,” Warren stated prior to the bill’s potential passage. She described the legislation as one that “facilitates Trump’s corruption by enlarging the stablecoin market” and would ultimately “place Trump in control of his own financial products.”
Negotiators attached stricter ethical standards for congressional and administrative members, including a prohibition against Congress members issuing stablecoins. However, Warren and a few other Democrats believe this is insufficient. “This Congress should act as a check on the presidency,” Warren asserted.
The bill aims to establish a federal framework for regulating the stablecoin market, which is currently governed by a disorganized mix of federal and state laws.
Stablecoins represent a growing segment of the cryptocurrency sphere, generating massive profits for several major players. They are designed to buffer against the notorious volatility of cryptocurrencies, as they are pegged to real-world assets such as the US dollar and gold, typically maintaining a value close to one dollar, making them more dependable compared to other crypto assets.
The push for regulation has garnered bipartisan support, but Trump’s involvement in the crypto landscape has complicated the legislative process. Earlier this year, Trump launched Meme Coin, which reportedly generated over $320 million in fees for its creators, as per blockchain analytics firm Chain Olisis. Furthermore, he is set to attend a dinner on May 22nd, accessible to anyone purchasing sufficient coins.
Another crypto venture associated with the Trump family, World Liberty Financial, recently announced the issuance of a unique stablecoin called USD1. This stablecoin gained significant traction last week when Global Liberty Financial declared it would use $2 billion worth of USD1 to acquire shares in Binance, the world’s largest cryptocurrency exchange.
Former skeptics have now become avid promoters, with Trump promising to lead the way through a prosperous period for the cryptocurrency industry. His administration has undertaken various initial measures to advance crypto initiatives without congressional approval, including establishing a strategic Bitcoin reserve and rolling back prior enforcement actions. However, Trump must secure congressional support to achieve vital industry priorities, including the passage of stablecoin legislation.
Legislative Democrats contend that Trump’s involvement in the market could not be overlooked.
“The stablecoin market has nearly reached $250 billion, and the US cannot afford to remain on the sidelines,” remarked Senator Mark Warner, one of the leading Democratic negotiators for the bill. “Clear regulations are essential to protect consumers, uphold national security, and foster responsible innovation.”
Source: apnews.com