Key Takeaways:
Stablecoin regulation remains fractured following Senate rejection.
Treasury Secretary warns that U.S. crypto dominance is at risk without the GENIUS Act.
Democrats sank the bill over AML and national security concerns.
A controversial 48-49 Senate vote on Thursday to reject the GENIUS Act has sparked an immediate backlash from U.S. Treasury Secretary Scott Bessent, who condemned the decision as a “historic misstep” with global consequences.
In a strongly worded post on X (formerly Twitter) on May 9, Scott Bessent condemned the Senate’s failure to advance the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, arguing it squandered a rare chance to lead the global stablecoin market.
“The world needs American leadership,” Bessent wrote. “The Senate missed an opportunity to provide that leadership today by failing to advance the GENIUS Act.”
Did the Senate Just Kill U.S. Crypto Dominance?
Scott Bessent labeled the bill a “once-in-a-generation opportunity” to assert dollar dominance through innovation.
He criticized the Senate for allowing state-by-state regulatory fragmentation to persist and warned that digital asset development could shift abroad without a unified federal framework.
The GENIUS Act, introduced in February by Senator Bill Hagerty (R-TN) and co-sponsored by prominent Republicans, including Chairman Tim Scott (R-SC) and digital assets advocate Senator Cynthia Lummis (R-WY), sought to provide a comprehensive federal framework for the issuance and regulation of stablecoins in the United States.
Despite early bipartisan momentum, the bill failed a procedural vote on May 8 after Senate Democrats abruptly pulled support over national security concerns, AML provisions, and last-minute resistance from key lawmakers.
Senator Mark Warner (D-VA), who opposed the bill, said its text was “not yet finished,” while others hinted at deeper political friction.
The Unspoken Political Tensions Fueling the GENIUS Act’s Demise
Some Democrats privately expressed discomfort with President Trump’s recent pro-crypto involvements, which they feared had tainted the legislative process with political overtones.
The bill’s failure has cast a shadow over the future of stablecoin regulation and broader crypto legislation, particularly ahead of the 2026 midterms when all House seats and one-third of the Senate will be up for grabs.
Senator Cynthia Lummis, a key co-sponsor, voiced her disappointment on X, stating that failing to pass the GENIUS Act was a step backward in securing America’s digital future.
John Deaton, a well-known pro-XRP lawyer, called on lawmakers to rise above partisan divisions. “Senators need to place the country first, not politics. This bill had bipartisan support just a week ago. What happened?”
Decentralization vs. Control: The Ideological Clash Central to Stablecoin Debates
Ethereum co-founder Vitalik Buterin, while not directly commenting on the GENIUS Act, had previously warned against “centralized stablecoins becoming a tool for geographical control.” The implication is that a U.S.-denominated stablecoin framework could undermine crypto’s decentralized ethos.
Lawmakers argue that stablecoins like Tether’s USDT require oversight to prevent criminal exploitation.
In addition, according to a previous report, stablecoins make up the bulk of illicit transaction volume in 2024.
The collapse of TerraUSD further fueled debate. The crash erased $40 billion in value, raising concerns about consumer risks in decentralized systems. Proponents of regulation cite TerraUSD as evidence that even decentralized models can fail, leaving users vulnerable.
However, critics note a contradiction. Many “decentralized” stablecoins still depend on centralized elements, such as development teams or governance structures. The result is a paradox, as blockchain systems designed to eliminate trust still rely on it, just in different hands.
Frequently Asked Questions (FAQs)
The 48-49 vote was a procedural defeat, not the end. Under U.S. Senate rules, a motion to reconsider permits the Senate to revisit the bill, so the GENIUS Act can still be reintroduced or brought back to the floor for another vote after further negotiations or revisions.
Introducing USD-backed stablecoins is widely seen as reinforcing and extending U.S. dollar dominance globally by allowing cross-border transactions and expanding dollar access beyond traditional banking systems. Stablecoins tied to the dollar are expected to help maintain its status as the world’s reserve currency and boost demand for U.S. Treasury securities.
A U.S. digital dollar issued by the government or linked entities, like the Trump family’s USD1 stablecoin, would be centralized by design, contrasting with the core blockchain principle of decentralization.
The post Scott Bessent Slams 48-49 Senate Snub – Will GENIUS Act Failure Cost U.S. Crypto Crown? appeared first on Cryptonews.
