With the Crypto Industry War Chest Looming, Senate Democrats Help GOP Pass GENIUS Act
Democrats "need to win the next election, which means we can not afford to alienate a very vocal and wealthy group of donors," wrote one lawyer who works with crypto clients.
Over the objections of critics who say a landmark cryptocurrency bill lacks adequate consumer and financial system protections, among other concerns, several Senate Democrats voted with Republicans on Tuesday to pass the legislation that would establish a regulatory framework for a type of crypto called stablecoin.
The Senate voted 68-30 to pass the bill, which is backed by the crypto industry, with two Republicans senators voting no. The bill's journey to Senate passage—which at one point seemed in doubt—comes after crypto groups spent tens of millions in support of candidates for federal office in the 2024 election cycle. The bill now heads to the House of Representatives.
Among the Democrats who voted for the Guiding and Establishing National Innovation for U.S. Stablecoins, or GENIUS, Act are Sen. Ruben Gallego (D-Ariz.) and the bill's co-sponsor Kirsten Gillibrand (D-N.Y.), both of whom received support from pro-crypto entities last year.
The full list of Democrats who voted in favor of the bill is: Angela Alsobrooks (D-Md.); Cory Booker (D-N.J.); Catherine Cortez Masto (D-Nev.); John Fetterman (D-Penn.); Ruben Gallego (D-Ariz.); Kirsten Gillibrand (D-N.Y.); Maggie Hassan (D-N.H.); Martin Heinrich (D-N.M.); John Hickenlooper (D-Colo.); Andy Kim (D-N.J.); Ben Ray Luján (D-N.M.); Jon Ossoff (D-Ga.); Alex Padilla (D-Calif.); Jacky Rosen (D-Nev.); Adam Schiff (D-Calif.); Elissa Slotkin (D-Mich.); Mark Warner (D-Va.); and Raphael Warnock (D-Ga.).
Acting CEO and president of the Crypto Council for Innovation, Ji Kim, called the Senate's passage of the bill a "historic step forward for the digital asset industry," in a prepared statement shared in advance of the vote, according to the outlet CoinDesk.
The Senate's passage of the bill came one day after the outlet The Lever reported that "a private group chat of Democratic Party operatives and crypto industry advocates has been secretly coordinating to push Democratic senators" to support the bill.
The Lever reviewed the contents of a Signal chat which contained messages from venture capitalists, lobbyists, lawyers for crypto firms, former staffers on Capitol Hill, and others. Participants in the chat expressed the need for the Democrats to pass the bill in order to avoid alienating the crypto industry.
Avichal Garg, a managing partner at a venture capital firm that focuses on digital asset technology like cryptocurrency, said in the chat that "if Dems bail on this [bill], they will get 0 dollars going forward," according to The Lever.
"It would be political suicide for them not to support it," he added.
Jason Gottlieb, a lawyer who works for the law firm Morrison Cohen and defends cryptocurrency companies, wrote in the chat that regardless of concerns about the shortcomings of the bill, Democrats "need to win the next election, which means we can not afford to alienate a very vocal and wealthy group of donors," The Lever reported.
Last year, the industry pumped more than $40 million into a successful effort to topple former Democratic Sen. Sherrod Brown of Ohio in favor of his Republican challenger luxury car dealer Bernie Moreno.
No one has been a bigger critic of the GENIUS Act than Sen. Elizabeth Warren (D-Mass.), the ranking member on the U.S. Senate Committee on Banking, Housing, and Urban Affairs, who has warned that in addition to weak protections for consumers and financial stability, the bill allows tech companies to issue their own private currencies and "take control over the money supply."
She also said that the GENIUS Act mirrors the passage of the 2000 passage of the Commodity Futures Modernization Act (CFMA), which deregulated derivatives and helped the product proliferate in the lead-up to the financial crisis of 2008.
"It all sounds very similar. But there is one big difference between the GENIUS Act and the CFMA," said Warren on the Senate floor earlier in June, according to a copy of her remarks. "President [Bill] Clinton did not own a derivatives company. President [Donald] Trump does own a stablecoin company."
Warren told Rolling Stone ahead of key votes that the GENIUS ACT would "create a superhighway for Donald Trump's corruption."
Earlier this year, the Trump family's crypto company, World Liberty Financial, launched its own stablecoin called USD1.
In May, it was announced that USD1 would be used for a $2 billion deal between an investment firm established by the government of Abu Dhabi, MGX, and the world's largest crypto exchange, Binance.
The GENIUS Act bars executive branch officials and lawmakers from issuing stablecoins, but according to the Wall Street Journal, "it isn't clear how that would affect the Trump family's World Liberty Financial crypto firm because regulators would have to interpret the company's ownership structure."
