Why The Senate Crypto Bill Is In Turmoil

The Senate is entering a sudden cryptocurrency policy scramble, with one of President Donald Trump’s legislative priorities on the line.

Bipartisan talks over a landmark crypto bill have hit an unexpected roadblock, after nine key Senate Democrats on Saturday said they wouldn't support revisions that GOP lawmakers unveiled last week. The bill would create the first-ever federal regulatory framework for so-called stablecoins that are pegged to the value of the dollar. Setting up crypto-friendly regulations for stablecoins and other digital tokens is a priority of Trump's financial policy agenda.

The Democrats' concerns — including from some who supported an earlier version of the bill in committee — had been festering for days behind the scenes, according to more than half a dozen aides and lobbyists granted anonymity to relay sensitive details of the negotiations. Republicans revamped the proposal as they also moved last week to expedite a floor vote by the end of the month.

GOP aides involved in talks said they were stunned by the Democrats’ statement Saturday, which argued that the revised proposal wouldn't go far enough to crack down on money laundering and to protect the broader financial system. But Republicans remain hopeful that there is still a path forward to win over Democratic support, according to two GOP aides with knowledge of the negotiations.

“The fact of the matter is Dems, including me and my team, were trying to negotiate with the Republicans for weeks,” Sen. Ruben Gallego, the Arizona Democrat who led the Saturday statement, wrote Sunday on X. “The bill that was introduced for floor consideration backpedaled on a lot of the progress we made and did not include other improvements we sought. It seems they want us to suck it up and vote for this bill without our input."

The clash among otherwise crypto-friendly senators is the latest test for the industry in Washington, where its influence has surged thanks to a successful campaign finance push last year and the return of Trump. The stablecoin legislation would be the first major crypto revamp to move through the Senate after years of lobbying. It also marks a big political test for Democrats, who have been deeply divided over whether crypto is beneficial to society or a threat to the financial system and national security. The Trump family's attempt to start a crypto empire has made supporting the bill more complicated.

Senate Minority Leader Chuck Schumer — who has warmed up to crypto over the past year — privately urged Democrats on Thursday not to commit to supporting the stablecoin bill, according to two Democratic aides granted anonymity to describe the private comments. The New York Democrat urged his members at a tense, closed-door caucus meeting to use their leverage to force additional changes to the bill. He raised specific concerns about how the legislation would treat foreign companies like Tether, which issues the largest stablecoin in the world. The caucus meeting, which was first reported on by Axios, was not initially intended to focus on crypto.

At the meeting, other senators including Banking Committee ranking member Elizabeth Warren raised concerns about passing the industry-backed crypto legislation as the Trump family deepens its financial entanglements in the digital assets sector. The Massachusetts Democrat cited a New York Times report that said a fund backed by Abu Dhabi planned to pay for a $2 billion business deal using stablecoin tokens issued by a Trump family firm.

A Schumer spokesperson said in a statement that “there was a spirited conversation on this piece of legislation and it will be an ongoing conversation within caucus as this bill winds its way through the process.”

At the meeting, Sen. Kirsten Gillibrand, a co-sponsor of the stablecoin bill who has been pushing for years to pass industry-friendly crypto legislation, laid out an array of changes that she negotiated and that she said would improve it.

A spokesperson for the New York Democrat, Evan Lukaske, said in a statement that she “believes that the best way to address concerns about the Trump family’s crypto interests are by enacting clear regulations, not leaving the status quo in place.”

Gillibrand is one of several Senate Democrats who have supported pro-crypto proposals. The stablecoin bill, which is led by Sen. Bill Hagerty (R-Tenn.), cleared the Senate Banking Committee in March with support from five Democrats, despite opposition from Warren.

Four of those Democrats — Sens. Mark Warner of Virginia, Lisa Blunt Rochester of Delaware, Andy Kim of New Jersey and Gallego — said in the statement Saturday that the new version of the legislation “still has numerous issues that must be addressed.” The senators said they “would be unable to vote for cloture should the current version of the bill come to the floor," referring to a procedural motion in which Democrats would be needed to advance the bill to a final vote on passage.

Gallego, who serves as the top Democrat on a Senate Banking subcommittee on crypto, wrote on X Sunday that the statement wasn't "some reversal out of nowhere by Dems.” He said he looks forward to "continuing to get this bill to a better place.”

Democrats wrote the Saturday statement because of concerns about the new draft, not because of Schumer’s comments about withholding support, according to a Democratic aide with direct knowledge of the matter.

Hagerty said on X Saturday that lawmakers “must advance legislation that enshrines American leadership in the digital asset space and protects the US dollar for centuries to come.”

“That time is now,” he wrote. “We have a choice here. 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.”