Supported by President Donald Trump and the cryptocurrency industry, the Senate passed bipartisan stablecoin legislation, which is expected to be finalized next week.
In addition to Democrats’ quest to prevent Trump from making profit from his cryptocurrency endeavors, Senate leaders are anticipated to thwart attempts to attach language backed by retailers and their allies in the Senate to require competition to Visa Inc. and Mastercard Inc. in credit card processing.
The 68-30 procedural vote on Wednesday removes a significant procedural hurdle. It occurred a day after the House Financial Services and Agriculture committees approved broader crypto legislation, with Republicans rejecting amendments aimed at Trump’s crypto gains.
Both initiatives are high priority in the digital asset industry. Crypto titans poured money into last year’s election through the best-funded alliance of corporate political action committees in US history: Fairshake PAC and two related corporations.
Supporters of the industry are hopeful that stablecoin legislation, which attempts to establish guidelines for cryptocurrency tokens based on the value of the US dollar or another conventional currency, would contribute to stablecoins becoming a widely accepted mode of payment.
Although some House Republicans have advocated for combining the stablecoin proposal with the larger law that regulates digital assets, doing so might cause the stablecoin bill to take longer to reach the president’s desk.
Tim Scott, the Senate Banking Chair, told Bloomberg that while he does not expect the Senate to enact a comprehensive crypto regulatory measure until the fall, he does intend to have a hearing on it in July.
Speaking on the Senate floor on Wednesday, Senate Majority Leader John Thune stated his expectation that the House will swiftly send the stablecoin measure to Trump’s desk and set a target of passing it within a few days.
Supporters, such as Treasury Secretary and President Scott Bessent, have praised dollar-pegged stablecoins for their ability to boost demand for dollars and US debt. The bill would require stablecoin issuers to maintain dollar-for-dollar reserves in assets such as short-term government debt or other securities under the watchful eye of federal or state regulators.
Retailers have advocated for the measure because they believe stablecoins will enable them to conduct transactions more quickly and affordably than current payment methods, such as credit cards. They have been advocating for the credit card legislation, which would require large banks to process credit card transactions via a network that is a rival to Visa and Mastercard.
Smaller banks in particular have issued warnings about a possible drain on deposits and, as a result, credit availability. Bigger banks are thinking about launching their own stablecoins, which make profit by charging interest on the reserves.
The stablecoin measure, according to Democrats lead by Senator Elizabeth Warren, does not go far enough in protecting consumers and the financial system in the event that issuers fail, leaving consumers at risk of losing their money and possibly prompting calls for government bailouts.
