US Crypto Bill Faces Setback as Senate Democrats Withdraw Support
Senate Deadlock Threatens Passage of Legislation Over Regulation Disputes
A key effort to regulate cryptocurrencies collapsed after months of negotiations. Their proposed legislation aimed to set rules for the digital currency markets, but disagreements over overseeing the industry led to its failure. Nine Senate Democrats who once supported crypto-friendly laws are now opposing a major stablecoin law. The Senate is divided on the US Crypto bill over the issue of how strictly to regulate the industry. In a surprise statement, a group of senators said they won't support the Republican-led law “in its current form” if it comes up for a vote.
Senate Pushes for Key Revisions to the Legislature Amid Growing Opposition
The opposition has created a major hurdle for the act's passage. Lawmakers still hope to negotiate and fix US crypto bill before a final vote. The key changes senators want in DeFi legislature are:
Stop Illegal Money: Better rules to block its criminal use.
Regulate Foreign Stablecoin: Tighter oversight of overseas dollar-pegged cryptocurrencies.
Protect National Security: Prevents risks from foreign DeFi firms.
Safeguard Banks: Ensure stablecoins don’t harm the financial system.
Punish Rule-Breakers: Harsher penalties for companies that don't comply.
Lawmakers made this last-minute push just before the procedural vote on the US Crypto Bill, that could set up America’s first national set of rules for stablecoins and DeFi money designed to hold a steady value.
What is the US Crypto Bill?
The GENIUS Act would create national rules for stablecoins and digital money that’s tied to regular assets like the US dollar. The legilation tries to bring clear regulations to the rapidly-evolving digital money world, dealing with issues like keeping customers safe, protecting the financial system, and national security. It's a joint effort by both the political parties, maily pushed by Republican Senator B. Hagerty from Tennessee and supported by Democratic Sen. Kirsten Gillibrand from NY.
Why Negotiations Collapsed?
The US crypto bill started with support from both parties and passed the Senate Banking Committee. But, after Republican lawmakers made changes to the proposal, nine Democratic senators pulled their support. These senators worry that the new version doesn’t do enough to stop money laundering or protect the financial system. other reasons are:
Split Over Regulation Strictness: Some Democrats wanted tougher rules to prevent scams and market manipulation. Many Republicans pushed for a more flexible approach to avoid stifling innovations.
Industry Innovation: firms dealing in digi currency and Wall Street interest lobbied hard to shape the proposal, with some pushing to weaken oversight.
Lack of Political Urgency: Without a major crisis, like the 2022 FTX collapse, lawmakers felt less pressure to act quickly.
Senator Gallego (Ariz.) explained that the revised US crypto bill removed many previous agreed-upon compromises, quoting: “The bill that was introduced for floor consideration backpedalled on a lot of the progress we made and didn’t include other improvements we sought.”
Current Status and Outlook:
Republican supporters still hope to get Democrats back on the board, but the chances are now unclear. Losing Democratic support shows how divided the party is about digital money rules. Since the Senate requires two-thirds votes to pass legislatures, lawmakers will need to restart talks and likely make changes to fix the problems Democrats have raised. The journey of the US crypto bill reflects the complexities of crafting comprehensive digital money regulations, balancing innovation with the imperative of safeguarding the financial system and ensuring ethical governance.
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