The crypto sector, experiencing an unprecedented favorable climate under Washington’s guidance, has encountered its initial significant challenge during the Trump administration.
The Senate Democrats’ action on Thursday to
turn down a cryptocurrency bill supported by the industry
struck a major blow against the digital asset lobbying efforts on Capitol Hill, where their plans now seem precarious.
The cryptocurrency legislation might still move ahead. However, the sector’s attempts to sway lawmakers from both parties through extensive lobbying efforts worth hundreds of millions of dollars are encountering significant ideological divisions within Congress. As Democratic members seek fresh ways to counter President Donald Trump, this opposition poses challenges for the industry’s advocacy initiatives.
“I am extremely disappointed,” stated Senator
Cynthia Lummis
, a Wyoming Republican who has earned the nickname of Senate’s ” crypto queen” and has assisted in leading
A sequence of talks aimed at winning over Democratic opponents.
prior to this week’s vote.
This setback highlights the difficulty of achieving bipartisanship in policy-making during what some call the era of Trump 2.0. Similar to their effort to get the tax bill through, they faced significant challenges.
–
Reducing mega bills, Republicans require support from Democrats to push pro-industry cryptocurrency legislation forward in the Senate, which is causing rifts among those on the left.
numerous Democrats — including the Minority Leader
Chuck Schumer
In recent years, representatives from New York have grown more accepting of cryptocurrency and have sought contributions from the industry, fostering optimism that this might be one of the few topics conducive to bipartisanship during this congressional term. However, progressive politicians such as Senator
Elizabeth Warren
of Massachusetts
have remained staunch opponents
Regarding Republican-driven initiatives to create laws for cryptocurrency, and worries about connections between the Trump family and cryptocurrencies.
have been prominent in influencing policy-making endeavors in recent weeks
It has all culminated now that Schumer is still grappling with the repercussions of his choice not to trigger a government shutdown back in March.
One week before the voting takes place, the leading figure of the Democrats in the Senate
quietly encouraged his peers during a closed-door session
Not to agree to back the bill and utilize their influence to push for further modifications. Other senators, like Warren, expressed reservations over enacting the industry-supported cryptocurrency legislation amid the Trump family’s increasing involvement with digital assets.
Trump’s sons
started a cryptocurrency initiative last year
that
Issues a digital token referred to as a stablecoin
That is tied to the dollar’s value and might gain directly from the bill discussed on the floor Thursday.
The bill
, led by Sen.
Bill Hagerty
(Representative from Tennessee), would establish the first ever regulatory structure in the US for stablecoins — a long-standing objective for American issuers of these coins who believe it might aid in legitimizing the asset as a conventional financial instrument. This proposal came just two days prior to his inauguration.
Trump also launched his own memecoin.
and recently
extended an invitation for a dinner along with a tour of the White House to the leading investors in this field.
.
“The Trump cryptocurrency scheme represents the most significant corruption in the annals of the White House,” stated Senator.
Chris Murphy
(D-Conn.) stated, “Given our involvement in overseeing thecrypto sector, it’s crucial that we focus on eradicating such corrupt practices.”
The party is divided regarding the extent to which Trump’s cryptocurrency ventures should be factored into the legislation. Murphy and fellow Democrats advocate for including provisions in any crypto-related bill that would prohibit the president from launching crypto tokens. However, pro-crypto Democrats argue that possible conflicts of interest ought not impede progress on regulating digital assets. These members assert that their main focus when discussing the recent stablecoin legislation was primarily about the specifics of the bill itself rather than considerations related to Trump.
“A significant portion of that has, I believe, served as more of a distraction rather than anything substantive,” Senator stated.
Ruben Gallego
(D-Ariz.), who supported an earlier draft of the stablecoin bill during committee hearings and assisted in leading unsuccessful negotiations before the Thursday floor vote. “Even without passing any stablecoin legislation, he will continue with his current activities. The crucial step we must take is to enact a robust piece of legislation.”
In spite of the complications involving Trump and the setback on Thursday, the stablecoin legislation remains alive. The Senate Majority Leader stated this.
John Thune
voted against the bill and initiated a motion to reconsider, which is a parliamentary maneuver enabling him to revisit the issue on the legislative floor. A coalition of Democrats, including Gallego—who spearheaded several private talks with Republicans before the voting—has expressed their determination to return to discussions aimed at reaching an agreement.
The Arizona Democrat sought to postpone Thursday’s vote, stating on the Senate floor that Democrats “require additional time” to complete a deal and share it with fellow members. However, Republicans dismissed this attempt. On Thursday, Republican legislators criticized Democrats for prioritizing political gain over what could have been a bipartisan legislative success.
“It was a ballot aimed at preventing President Trump from achieving success in the digital asset sector. This vote went against good judgment—nothing more complex than that,” stated Senator Sherrod Brown, who chairs the Senate Banking Committee.
Tim Scott
(R-S.C.) said in a floor speech following the vote. “Trump Derangement Syndrome has once again hijacked responsible governance in this chamber.”
Even though it’s an awkward financial regulatory issue, political campaigns play a role for Democrats in the cryptocurrency discussion. Any at-risk Senate Democrats opposing initiatives backed by the industry face threats from the substantial amount of cryptocurrency money in their election campaigns. There’s also a crypto-focused Super Political Action Committee (PAC) involved.
that invested over $100 million into the 2024 elections
has restocked its war chest and now holds over $110 million for the upcoming 2026 elections.
“I consistently fret over the impact of money in Washington, yet the cryptocurrency sector believes they wield considerable authority at present due to their financial contributions,” Warren stated to journalists before the vote on Thursday.
The funds from the super PAC serve as both an incentive and a deterrent for legislators: They can advantage those who support the industry’s goals, while posing a threat to individuals who oppose them. The cryptocurrency-focused super PAC called Fairshake invested $40 million during the 2024 election cycle to counteract a significant industry opponent on the left—former Senate Banking Committee Chairman Sherrod Brown from Ohio—and simultaneously supported Democratic candidates like Gallego and Senator.
Elissa Slotkin
Maintaining the support for cryptocurrency as a non-partisan effort is crucial for industry leaders at the University of Michigan.
The campaign organization for Senate Republicans, chaired by Scott, aimed to take advantage of the vote on Thursday by stating that cryptocurrency executives shouldn’t use their funds to support any Democrats. “Those supporting Senate Democrats with expectations of advancements incrypto regulation are overlooking the facts,” stated Jennifer DeCasper, a seasoned Scott aide and the Executive Director at the National Republican Senatorial Committee, in an official release.
Despite the challenging backdrop, pro-crypto lawmakers on both sides must now work to resuscitate their talks. In addition to the legislation that was up for a vote Thursday, Republicans are also hoping to pass a separate, broader crypto measure by August that would divvy up oversight of digital assets between market regulators.
Certain cryptocurrency proponents currently have concerns about a proposed comprehensive market regulation bill, anticipated to be far more complex and contentious compared to the stablecoin-related measures. They doubt its political viability for approval. However, some observers believe there are positive aspects in the level of engagement shown by legislators from all factions during intense talks preceding the scheduled debate on the House floor.
I don’t believe this signals an apocalyptic scenario,” stated Kara Calvert, a prominent U.S. lobbyist for Coinbase, the biggest U.S. cryptocurrency exchange. “Such engagement is precisely what’s needed to achieve success and ensure it is handled correctly.
Jordain Carney was involved in this report.