Senate Divided as Stablecoin Bill Faces Political and Policy Hurdles

The US Senate is facing renewed turbulence over a long-anticipated cryptocurrency bill, as bipartisan negotiations over the first federal framework for stablecoins have stalled, Politico reports.

A group of key Senate Democrats announced over the weekend that they do not support the latest version of the legislation, raising concerns about both the substance of the proposal and the broader implications for financial security.

The bill, spearheaded by Sen. Bill Hagerty (R-Tenn.) and backed by several Democrats on the Senate Banking Committee earlier this year, aims to establish regulatory oversight for stablecoins — digital assets pegged to the value of the US dollar. The proposal represents one of the most significant federal efforts to regulate the crypto sector and has been positioned as a priority in former President Donald Trump’s financial agenda.

However, recent changes made by GOP lawmakers to accelerate the bill’s passage have drawn criticism. In a statement released Saturday, nine Senate Democrats, including some who previously supported the bill in committee, declared their opposition to the revised draft. They argue it lacks sufficient safeguards against money laundering and fails to address potential risks to the broader financial system.

Sen. Ruben Gallego (D-Ariz.), who leads a subcommittee on crypto policy and organized the Democratic statement, said on social media that negotiations with Republicans had broken down.

“The bill that was introduced for floor consideration backpedaled on a lot of the progress we made,” he wrote.

Sen. Gallego accused the GOP of moving forward without meaningful Democratic input.

The disagreement underscores deeper tensions within the Democratic caucus, where views on cryptocurrency remain sharply divided. While some Democrats see crypto innovation as an economic opportunity, others, like Sen. Elizabeth Warren (D-Mass.), continue to express skepticism about its role in the financial system and national security.

The political backdrop has further complicated matters. With the Trump family actively expanding its interests in the digital assets sector, including reported ties to a $2 billion stablecoin-funded investment from Abu Dhabi, some Democrats are wary of passing a bill that could be perceived as favorable to those efforts.

Senate Majority Leader Chuck Schumer (D-N.Y.) has urged caution. In a private meeting last week, he reportedly advised Democratic senators not to commit to the bill as written, encouraging them to use their leverage to press for more changes. According to aides, Schumer raised concerns about how the legislation would handle foreign crypto companies like Tether, the issuer of the largest stablecoin globally.

Despite the internal pushback, some Democrats remain committed to advancing the bill. Sen. Kirsten Gillibrand (D-N.Y.), a co-sponsor and long-time advocate for crypto regulation, defended the revised legislation, saying that enacting clear rules would be more effective than maintaining the current regulatory vacuum. Her spokesperson emphasized that she has negotiated important changes to improve the bill’s safety and transparency.

Still, Democratic holdouts have signaled they would block the bill from advancing under current Senate rules, threatening to withhold the votes needed for cloture — a key procedural step to bring legislation to the floor for a final vote.

Republican sponsors, meanwhile, remain optimistic.

“We have a choice here,” Hagerty posted on X. “Move forward and make any remaining changes needed in a bipartisan way, or show that digital asset and crypto legislation remains a solely Republican issue.”