The GENIUS Act faces a possible demise after nine Senate Democrats opposed the stablecoin.

The group comprises several senators who initially supported the bill have voiced concerns about essential sections.

The fate of the GENIUS Act, a bipartisan bill aiming to establish a legal framework for stablecoins in the U.S., hangs in the balance as nine Senate Democrats have voiced their dissent towards the legislation, rendering its passage bleak.

Among the Democrats who penned the opposition letter are Senators Ruben Gallego, Mark Warner, Andy Kim, and Lisa Blunt Rochester, several of whom had previously expressed support for the bill. Their stance shifts the focus to pressing issues such as anti-money laundering (AML), national security, and financial system stability.

"While we broadly agree with the goal of enacting legislation this session to regulate stablecoins, we feel strongly that the current version of the bill does not go far enough to address several critical issues," the Democrats stated in their letter to colleagues.

The senators highlighted the need for more robust provisions to safeguard national security and prevent financial system risks, especially with foreign issuers. They also voiced concerns over the lack of sufficient AML measures in the bill.

"We must ensure that any stablecoin legislation takes into account the full scope of national security implications and protects our financial system from instability," the senators asserted.

The House bill, which is currently stalled in the Senate, would require stablecoin issuers to maintain full reserves for their tokens and undergo regular audits. Issuers with a market capitalization exceeding $50 billion would be subject to monthly disclosures and annual audits.

However, the group of Democrats argued that the bill does not fully address concerns about the stability of the U.S. financial system, especially regarding foreign issuers. They believe that the legislation should factor in the potential risks posed by foreign actors and institutions engaging in stablecoin issuance.

The Democrats' statement puts a majority vote for the bill in jeopardy, posing significant challenges for the legislation.

"The threat posed by foreign adversaries through technology, specifically in the realm of digital assets, is a pressing concern that we must address without delay," said Senator Kim, emphasizing the urgency of considering national security implications.

The bill faces an uphill battle as it needs to secure at least 60 votes to pass due to potential Republican dissent.

The GENIUS Act, which stands for "Global and Inclusive Stablecoins, Used in Trust and Unburdened Systems”, is a bipartisan measure that aims to regulate stablecoins in the U.S. It has secured support from Senators Bill Hagerty, R-Tenn., and Gary Schumer, D-N.Y., and its passage is crucial for the future of digital assets in the country.

Hagerty, a Republican senator, expressed confidence in securing bipartisan support for the bill, highlighting the importance of a unified U.S. approach to digital assets on a global scale.

"We're seeing a bipartisan consensus emerge in the Senate to complete this critical step in strengthening America's leadership in the emerging digital asset space," said Senator Hagerty.

The bill's passage is being closely watched by the crypto industry and broader financial institutions as it will determine the legal landscape for stablecoins in the U.S. Congress is facing pressure to quickly establish clear and fair regulations for digital assets as the market continues to grow and innovate.

The bill’s passage will also depend on the involvement of other Democrats, such as Kirsten Gillibrand and Angela Alsobrooks, who are yet to sign the letter but could be persuaded to shift their stance.

Hagerty believes that advancing and enacting the bill will be essential to protect the stability of the U.S. dollar and ensure U.S. dominance in digital asset regulations.

"This bipartisan legislation will help to prevent a rapid devaluation of the dollar and ensure that the U.S. remains the world's preeminent financial power," he concluded.

The setback for the GENIUS Act comes amid increased public interest in President Trump's family ties to the crypto sector.

The attention on the Trump family's stablecoins and digital asset ventures could influence the political perspectives of the bill's supporters as they strive to balance consumer protection and innovation in the emerging digital asset landscape.

House Democrats are also pushing for stricter regulations to shield consumers and prevent potential conflicts of interest. They aim to introduce amendments to the bill that would enhance consumer protections and prevent any perceptions of favoritism towards specific institutions or individuals.

The GENIUS Act and similar legislation submitted to the House aim to regulate stablecoins used by large technology companies and hedge funds, presenting a new chapter in the U.S.'s approach to digital assets.

Congress is facing pressure to quickly establish clear and fair regulations for digital assets as the market continues to grow. The outcome of the proposed legislation could transform the future of the U.S. crypto market and its regulatory framework.

News data source: kdj.com

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