The GENIUS Act, a proposed U.S. Senate bill intended to establish the first federal regulatory framework for stablecoins, has encountered significant political roadblocks that have stalled its progress. Initially supported by bipartisan lawmakers, the bill was blocked in May 2025 following last-minute political maneuvers attributed to tensions between Democrats and the Trump administration.
The bill aimed to introduce federal licensing and supervisory requirements for stablecoin issuers, enforce regular security audits, and limit issuance to fully backed assets by licensed entities. However, Democrats withdrew support near the bill's critical moment, citing concerns about corruption and conflicts of interest related to former President Donald Trump and his family's involvement in the crypto sector.
Democratic lawmakers are pushing for amendments to include anti-corruption safeguards specifically targeting Trump and his inner circle's potential to profit from stablecoins or misuse political influence. Several senators continue to advocate for these protections and have threatened to withhold support unless the bill addresses these concerns.
Despite the political contention, some Democrats urge passage regardless of the ongoing disputes, highlighting the importance of embracing blockchain technology's permanence. Meanwhile, Trump's family crypto business, World Liberty Financial (WLFI), has launched its own stablecoin, USD1, which has secured a notable settlement currency role for a $2 billion Binance exchange investment from Abu Dhabi-based MGX.
The stalling of the GENIUS Act introduces regulatory uncertainty to the stablecoin industry, complicating efforts to achieve clear oversight and risking further delays in crypto regulation. Industry leaders criticize the politicization as harmful to market stability and fear prolonged gridlock could spur self-regulatory approaches or shifts in strategy. This episode reflects ongoing challenges in U.S. crypto legislation, underscoring the impact of political disputes on the sector’s regulatory progress.