Senate Democrats Call for Revisions to Cryptocurrency Legislation
Senate Democrats are pressing for modifications to the cryptocurrency legislation currently before Congress, driven in part by emerging concerns that the Trump family may be leveraging its connections and President Trump’s influence for financial gain in crypto trading. The tension escalated late last week following a private meeting among Senate Democrats, where Senate Majority Leader Chuck Schumer advised his colleagues against supporting the so-called GENIUS Act, which has backing from the cryptocurrency sector. Initially, this bill seemed poised for a smooth passage, enjoying bipartisan support and a scheduled procedural vote this week. However, during the meeting, Senate Democrats voiced apprehensions that the proposed legislation would unduly benefit the Trump family’s cryptocurrency ventures, referencing reports from The New York Times.
Concerns Over Trump Family’s Crypto Business
One significant issue raised by lawmakers was the recent deal secured by the Trump-affiliated firm, World Liberty Financial, to accept $2 billion in deposits from an Abu Dhabi-backed venture fund, as revealed by The Times. Senator Jeff Merkley from Oregon described this situation as a troubling display of influence peddling and a conflict of interest, emphasizing the need for immediate action to eradicate such practices. Senator Elizabeth Warren from Massachusetts also urged her fellow Democrats to take a firm stance against the bill, claiming it would enable the president and his family to enrich themselves further and labeling it as a form of corruption that no senator should endorse.
Broader Ethical Concerns and Legislative Challenges
The ethical implications surrounding the bill have heightened the sense of discomfort among Democrats, with several senators highlighting additional shortcomings, particularly the absence of adequate safeguards against money laundering. Representatives from the White House, the Trump Organization, and World Liberty have not yet responded to queries seeking clarification on the matter. For months, cryptocurrency executives have actively lobbied for the GENIUS Act, which aims to simplify the ability for U.S. companies to engage with stablecoins—a type of cryptocurrency pegged to a stable asset, typically the U.S. dollar. This legislation would mark a significant step toward establishing a regulatory framework to support the growth of the crypto industry in the U.S. Stablecoins are favored among traders due to their stability in value, which facilitates a variety of business transactions.
Potential Profit for Trump Family Fuels Opposition
However, this potential growth for the cryptocurrency sector also poses a financial windfall for World Liberty, which has recently launched its own stablecoin. The Trump family and its associates stand to gain substantial revenue, potentially amounting to tens of millions annually, from the stablecoins offered by World Liberty. This prospect has sparked resistance from Democratic lawmakers, who articulated their objections during a recent meeting, focusing on President Trump’s conflicts of interest and provisions in the bill that could allow foreign stablecoin companies to bypass some regulations.
Democratic Opposition Could Hinder Legislation
On Saturday, a coalition of nine Democrats, including four who had previously supported advancing the legislation out of the Senate Banking Committee, declared their refusal to endorse it unless significant amendments are made. They argued that the bill does not include robust measures to combat money laundering or regulate international crypto firms, although they did not specifically address Trump’s business interests. In order for Senate Republicans to advance the legislation, they require the support of at least seven Democrats, making the emerging opposition potentially detrimental to the bill’s prospects, which would represent a major setback for the crypto industry’s ambitions in Washington.
Concerns from the Crypto Industry and Calls for Investigation
During the current election cycle, crypto companies have invested over $130 million in supporting congressional candidates, including Democrats in competitive races like Senators Elissa Slotkin from Michigan and Ruben Gallego from Arizona. Gallego, who previously backed the GENIUS Act in the Banking Committee, joined the group expressing concerns about the legislation this past weekend. Senators Merkley and Warren have taken steps to request an investigation by the Office of Government Ethics into the Trump family’s burgeoning cryptocurrency business dealings, labeling them as indicative of foreign influence that could pose risks to national security.
House Legislation and Growing Frustration Among Crypto Executives
A version of the stablecoin legislation is also under consideration in the House, where Democratic leaders plan to protest Trump’s involvement in the industry by staging a walkout during an upcoming hearing. Representative Sam Liccardo from California, who advocates for stablecoin legislation, noted that the Trump family’s recent actions have frustrated crypto executives who have been urging Congress to finalize the bill. He mentioned growing unease among industry leaders in Silicon Valley regarding how Trump has entangled the cryptocurrency sector in a scheme that appears to prioritize personal gain.
Republican Concerns About Trump’s Crypto Ventures
Even some Senate Republicans and long-time supporters of cryptocurrency have raised alarms about the Trump family’s attempts to capitalize on the industry. Senator Cynthia Lummis from Wyoming acknowledged her support for Trump but expressed her reservations about the implications of these developments. Throughout his campaign last year, Trump shifted from skepticism to advocating for digital currencies, pledging to make the United States the “crypto capital of the world.” Following his election, he appointed pro-cryptocurrency officials to key federal positions and promptly reversed regulatory measures introduced by the Biden administration.
Legislative Momentum and Potential Profits for World Liberty
The GENIUS Act was among the first pieces of legislation to gain traction in this arena. In March, the Banking Committee voted 18 to 6 in favor of advancing the bill, with support from Gallego and other Democrats. Soon after, it became clear that the stablecoin regulations would directly impact Trump’s business interests. Only weeks following the committee’s vote, World Liberty announced its plans to issue its own stablecoin called USD1, which could yield substantial profits for the Trump family. Firms that issue stablecoins function similarly to banks, profiting from deposits by providing coins in exchange and investing those deposits to earn returns.
Emerging Conflicts of Interest and Legislative Scrutiny
Recently, one of World Liberty’s founders disclosed at a crypto conference that a venture capital firm supported by the Abu Dhabi government intended to use $2 billion worth of USD1 for a significant industry transaction—essentially directing funds towards a business associated with the family of the U.S. president. Reports detailing the Abu Dhabi deal and other conflicts of interest surrounding World Liberty gained considerable attention in Congress last week. Senate Democrats circulated research memos highlighting these investigations and criticizing the bill for facilitating the Trump family’s potential profiteering from cryptocurrency operations. Representative Maxine Waters from California even recited one of The Times’ articles verbatim during a committee hearing last week.
Ongoing Negotiations and Trump’s Continued Efforts
During the Senate Democrats’ meeting, Schumer raised concerns regarding provisions in the legislation that could permit Tether, a foreign entity previously targeted by U.S. regulators, to issue stablecoins in the U.S. without adhering to several of the bill’s stipulations. He encouraged his colleagues to review classified briefings the Banking Committee had prepared about Tether. A spokesperson for Tether has yet to respond to inquiries. Senate aides reported that discussions are ongoing to address the issues raised by Democrats, as bipartisan lawmakers, including co-sponsor Senator Kirsten Gillibrand from New York, seek to move the legislation forward. Meanwhile, Trump remains undeterred, recently sharing an illustration of himself on his social media platform urging supporters to invest in a cryptocurrency named $Trump, which has already generated over $100 million in fees for his family and partners. Additionally, a super PAC supporting Trump was scheduled to host a fundraiser at his Trump National Golf Club in Virginia, where crypto executives were asked to contribute $1.5 million each for attendance.
