Democrats are putting up new resistance to crypto legislation prioritized by the Trump administration as they object to the involvement of the Trump family in that industry, in addition to a host of other issues.
Their resistance burst into the open this past weekend as nine Democrats, led by Sen. Ruben Gallego (Ariz.), released a public statement opposing the GOP-led Senate bill that seemed likely to deliver a major crypto win for Trump and Republicans.
The bill would establish rules governing stablecoins. Stablecoins are pegged to other assets, such as the US dollar.
Senate Minority Leader Chuck Schumer last Thursday urged members not to commit to voting for the stablecoin bill, saying they need leverage to make changes, according to a person familiar with that discussion.
Those familiar with the new Democratic opposition say one big concern for some is how the president and his family could benefit from the legislation. For others there are different objections, from anti-money laundering issues to consumer protections.
U.S. President Donald Trump, center, arrives to The White House Digital Assets Summit on March 7. (Photo by Anna Moneymaker/Getty Images) ·Anna Moneymaker via Getty Images
World Liberty Financial, a new crypto startup backed by President Trump and his sons, last month unveiled plans to mint its own US-dollar-pegged stablecoin in partnership with BitGo.
That stablecoin, it was announced last week, has been picked as the payment vehicle for a $2 billion investment into Binance from state-owned Abu Dhabi investment firm MGX.
Sen. Elizabeth Warren (D-Mass.) called out that $2 billion deal in a post on X last Thursday, saying “it smells like corruption” and that the bill being considered by lawmakers would “make it easier for the president and his family to profit off their own stablecoin.”
The Senate, Warren said, was “getting ready to green light the grift.”
Because of the new Democratic pushback, a vote on the legislation initially scheduled for Thursday is far short of the 60 votes needed to pass the full Senate and, if brought to the floor, would fail.
This came after Senate Majority Leader John Thune last Thursday initiated a process that expedited a vote on the stablecoin legislation.
U.S. Senator Elizabeth Warren (D-MA). REUTERS/Kevin Mohatt/File Photo ·Reuters / Reuters
There are a host of other issues that Democrats now cite as problems. They include new changes Democrats claim water down consumer protections and weaken money laundering safeguards, according to one Democratic aide.
They also don’t like that the president is exempted from existing ethics rules that prevent senior officials from profiting from the ownership of certain assets.
“This isn’t some reversal out of nowhere by Dems,” Sen. Gallego said in a post on X Sunday afternoon. “The bill that was introduced for floor consideration back-pedaled on a lot of the progress we made and did not include other improvements we sought,” he added.
Story Continues
The Democrats are seeking tighter restraints, including those addressing anti-money laundering, foreign issuers of stablecoins, and whether people close to government officials can own or benefit from these assets, according to another person familiar with the objections from Democrats.
It’s unclear whether both parties can resolve these issues in the coming weeks or whether the bill could die.
When asked about the holdout on Sunday afternoon, Trump said he didn’t know about it.
Sen. Ruben Gallego, D-Ariz. (Bill Clark/CQ-Roll Call, Inc via Getty Images) ·Bill Clark via Getty Images
“Crypto is very important,” Trump said at the same occasion. “I’m very much in favor of crypto because otherwise China is going to take it over,” he added.
Trump has already signalled his desire for the Senate to pass some kind of stablecoin legislation in the next three months.
At the first-ever White House crypto summit in early March, Trump said he hoped lawmakers could get stablecoin legislation to his desk before Congress’s recess beginning Aug. 5.
There are two stablecoin bills circulating through Congress currently.
The Senate bill, known as the GENIUS Act, was introduced by Senator Bill Hagerty (R-Tenn.) and carried support from two Democrat lawmakers, Kirsten Gillibrand (N.Y.) and Angela Alsobrooks (Md.), along with Republican senators Tim Scott (S.C.) and Cynthia Lummis (Wyo.).
The hope for the holdouts is that this bill will look more like the House stablecoin bill introduced by Rep. Maxine Waters.
Behind the scenes, lobbyists representing the US banking industry are also more in favor of the bill proposed by Waters.
These lobbyists are also seeking to prevent the current draft of the Senate bill from opening any kind of loophole that would let crypto firms offer bank-like products while sidestepping the more stringent rules US banks must follow, according to another person familiar with the matter.
Their qualms with the GENIUS Act are in some alignment with Democrat holdouts on the need for stricter anti-money laundering restraints. But their highest priority is preventing interest-bearing stablecoins from being issued by non-banks.
They are specifically seeking language that prevents US stablecoin issuers and intermediaries from offering interest to customers, as well as any verbiage that wouldn’t alter how the Federal Reserve doles out its so-called master accounts.
Since moving into the White House, President Trump has embraced more favorable regulation of digital assets while also participating financially in their rising popularity through numerous ventures.
That combo is uncharted territory for a US president and has drawn scrutiny for signaling a series of perceived conflicts of interest.
These ventures include the launch of his official memecoin and courting top holders with a private dinner, as well as his namesake Trump Media & Technology Group (DJT) announcing plans to launch a series of crypto holding ETFs with Singapore-based digital asset exchange Crypto.com.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
