President Trump’s recent cryptocurrency dealings are casting a shadow over efforts to pass legislation for the industry at a key moment, as the Senate gears up to vote on a stablecoin bill Thursday.
Senate leadership is preparing to bring the GENIUS Act, which would create a regulatory framework for payment stablecoins, to the floor. However, a contingent of crypto-friendly Democrats have threatened to vote it down, as they accuse Republicans of cutting off negotiations prematurely.
At the same time, Trump’s growing crypto ties are giving new fuel to the legislation’s opponents, who argue it will allow the president and his family to profit from the industry.
“Trump’s not helping himself,” said Nic Carter, a founding partner at crypto investment firm Castle Island Ventures, adding, “Everyone I know in crypto is very frustrated by this. It’s like a completely unnecessary own goal.”
Trump’s close ties to the crypto industry have raised concerns since before he took office. As the president embraced digital assets on the campaign trail last fall, he and his sons launched their own crypto venture, World Liberty Financial. And shortly before his inauguration, Trump and his wife Melania launch meme coins.
Both World Liberty Financial and the president's meme coin have drawn scrutiny once again in recent weeks.
Trump is set to attend a dinner with the top investors in his meme coin later this month. The announcement in April, which encouraged participants to “hold as much $TRUMP as you can,” caused the price of the token to spike 60 percent.
World Liberty Financial also announced last week that Emirati firm MGX would be using the company's brand-new stablecoin to conduct a $2 billion transaction with crypto exchange Binance.
Democrats have decried the moves as efforts by the president and his family to enrich themselves, calling for ethics investigations into both the meme coin dinner and the World Liberty Financial.
They argue that the meme coin and stablecoin can be used by Trump to improperly profit off his office and by outside actors, including foreign actors, to attempt to buy influence with the president.
The Trump family owns a 60 percent stake in World Liberty Financial, and a company affiliated with the family receives 75 percent of the revenue collected from its coin sales.
The growing scrutiny surrounding the president and his family’s crypto dealings is threatening to upend his administration’s efforts to pass long sought legislation providing the industry with greater regulatory clarity.
The administration and Republican lawmakers have repeatedly said they hope to pass both stablecoin and market structure legislation by August.
Stablecoin legislation appeared to be sailing forward, with versions passing out of both the Senate Banking Committee and House Financial Services Committee earlier this year.
However, progress came to a screeching halt last week. After Senate Majority Leader John Thune (R-S.D.) moved Thursday to expedite a vote on the GENIUS Act, nine Democrats who had previously backed the upper chamber’s stablecoin bill pulled their support.
The group, which included four senators who voted to advance the bill out of committee in March, said Saturday that the floor text put forward by Republicans lacked sufficiently strong provisions on anti-money laundering and national security, among other issues.
Sen. Ruben Gallego (D-Ariz.), the top Democrat on the Senate Banking Digital Assets Subcommittee, accused Republicans of attempting to force through the legislation without further negotiations.
“All of a sudden the language changed,” he told MeidasTouch in a Tuesday interview released Wednesday. “They backtracked on some of the stuff we had already approved. They weren’t even moving forward with further legislation. And then they announced the date of the first vote.”
“I think the purpose of that was really to put Democrats in a bad position and force us to vote for it,” he continued.
“You can’t throw us in the corner,” Gallego added. “You can’t try to f--- us and then say like, ‘Hey, deal with it.’ That’s just not going to work, especially when you still need our votes no matter what.”
Thune signaled an openness to making changes sought by Democrats on Tuesday but also appeared intent on moving the GENIUS Act forward despite recent pushback. He underscored the monthslong process that had gone into the legislation.
“My question is — when will the Democrats take yes for an answer?” Thune said at a press conference. “If they have other suggestions and things that they want incorporated into the draft, we are certain welcome to taking a look at and working with them on that. But we need to start moving forward.”
“This is a piece of legislation that has broad bipartisan support,” he added. “I think if we get it on the floor, it could get a really good vote from both Republicans and Democrats. But we’ve got to get it there.”
Senate Minority Leader Chuck Schumer (D-N.Y.) noted that the two sides are engaged in discussions.
“Look, we all know the level of corruption in the Trump administration is higher than any administration probably in American history,” he said at a presser Tuesday. “But on stablecoins, Democrats and Republicans are talking to each other.”
Meanwhile, opponents of the GENIUS Act pointed to the World Liberty Financial deal in urging lawmakers to vote against the stablecoin bill. The deal was announced the same day Thune moved to fast-track the legislation.
“A shady fund backed by a foreign government just announced it will make a $2 billion deal using Donald Trump’s stablecoins,” Sen. Elizabeth Warren (D-Mass.) said in a statement.
“Meanwhile, the Senate is gearing up to pass the ‘GENIUS’ Act - stablecoin legislation that will make it easier for the President and his family to line their own pockets. This is corruption and no senator should support it,” she added.
Concerns about Trump’s crypto moves have also spilled over to the House side, prompting Democrats to walk out of a hearing on market structure legislation Tuesday.
Rep. Maxine Waters (D-Calif.), ranking member on the House Financial Services Committee, objected to the joint hearing between the panel and the House Agriculture Committee.
She sought to block the hearing from moving forward, taking advantage of the need for unanimous consent.
Republicans and some Democrats ultimately proceeded with a more informal roundtable, while Waters and several other Democrats left to hold a separate hearing on Trump’s crypto ties.
“I, in good faith, could not provide my consent because our Republican colleagues refuse to address the unprecedented conflicts of interest presented by President Donald Trump and his family,” Waters said.
Carter, the crypto founder, noted that the problems plaguing stablecoin legislation could spell trouble for more complicated market structure legislation.
“Even something as apparently uncontroversial as the stablecoin bill, which has been bipartisan, if that’s not moving forward, I think it would be an extreme longshot that we could expect anything on market structure,” he told The Hill.
“Virtually everyone I know in crypto wished that Trump had just executed on his crypto platform and then not done anything else,” he added. “Right now, it’s like they’re hugging us to death.”
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