Washington – When the US Senate recently held a crucial vote on the stablecoin regulation bill, significant divisions emerged within the Democratic Party, with some lawmakers opposing the bill’s passage citing concerns that regulatory loopholes could breed corruption, highlighting the deep-seated contradictions in the United States over the issue of cryptocurrency regulation.
This vote focused on the Stablecoin Innovation and Protection Act, which aims to establish a federal regulatory framework for dollar-pegged stablecoins, requiring issuers to hold full reserves and undergo regular audits. Although the bill received partial support from both parties, it ultimately failed to pass with 43 votes in favor and 51 against, among which 22 Democratic lawmakers voted against it.
The opposition voices are concentrated on the issue of the allocation of regulatory powers. Kirsten Gillibrand, a Democratic senator from New York, pointed out that the bill proposes that state bank regulators dominate the approval of stablecoin issuance, which may lead to “race to the bottom” – states relax standards to attract enterprises and form regulatory arbitrage. She particularly emphasized that historically, state-level regulation has lagged behind many times in responding to financial innovation. If a unified federal standard is not established this time, “the risk of corruption will increase significantly”.
Another objection involves the qualification review of stablecoin issuers. Tammy Duckworth, a Democratic Congressman from Illinois, questioned that the bill did not explicitly prohibit non-bank institutions from issuing stablecoins, which might allow technology companies lacking traditional financial regulatory experience to flood the market and increase the risk of consumer fund security. She said in the debate, “We cannot allow the crypto industry to grow wildly in a regulatory vacuum.”
Democratic lawmakers who support the bill, however, emphasize the urgency of industry innovation. New Hampshire Senator Maggie Hassan believes that establishing a national regulatory framework is “a necessary step to prevent stablecoins from becoming money laundering tools and maintain financial stability”, and criticizes opponents for “throwing out the baby with the bathwater”. She pointed out that if the United States does not regulate stablecoins as soon as possible, it will fall behind other countries in the global digital currency competition.
The internal divisions exposed by this vote reflect the strategic predicament of the Democratic Party in its crypto policy: on the one hand, it needs to respond to the demands of progressive voters for financial regulation and anti-corruption; on the other hand, it is under pressure from campaign donations in the technology industry. According to public data, during the 2024 election cycle, the cryptocurrency industry donated over 12 million US dollars to Democratic candidates, mainly focusing on lawmakers who support regulatory innovation.
Analysts point out that as the “infrastructure” of the crypto market, the failure of the regulatory bill for stablecoins may slow down the process of crypto compliance in the United States. At present, the Federal Reserve is promoting the research and development of central bank digital currencies (CBDCS). However, if stablecoins cannot be subject to unified supervision, they may compete with CBDCS and even interfere with the transmission of monetary policy.
Although the bill failed to pass, leaders of both parties stated that they would continue to promote relevant legislation. Sherrod Brown, the chairman of the Senate Banking Committee, promised that a revised bill would be proposed in the next session, with a focus on strengthening federal regulatory authority and consumer protection provisions. The result of this vote also indicates that the US crypto regulatory legislation will go through a longer period of negotiation and compromise.
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