Senate Democrats are risking turning the entire crypto world against them.
That’s the major takeaway after a group of Senate Democrats blocked an up-or-down vote on the bipartisan GENIUS Act this month, which would have created a regulatory regime for stablecoins. The legislation represented what many believe was a sensible compromise to protect consumers, make the financial system more resilient, and facilitate financial innovations.
The main motivation for the obstruction by Senate Democrats appears to be their--wholly legitimate--questions about the current President and the appearance that he is using the office of the Presidency to promote his personal business interests and those of his family, and that these efforts extend to cryptocurrency.
However, blocking the GENIUS Act may not be the most productive way to express their outrage at the president’s behavior. The Democrats have a decent shot at taking back the House next year, and should the economy teeter into a recession it would put the Senate in play.
A wiser course of action to rehabilitate the Democratic brand might be to demonstrate the ability to govern by helping pass the GENIUS ACT and then push for more safeguards for crypto-buyers that could be duped by celebrities and political actors now (and in the future). Simply obstructing legislation that has the potential to make payments and other essential transactions faster and cheaper--and which has broad popular support--could end up putting the entire crypto industry permanently in the hands of the GOP.
The crypto industry gave much more to Republicans in the 2024 elections, while Democrats faced a backlash for blocking the industry’s policy initiatives. Major crypto super PACs gave $131 million to elect pro-crypto legislators. With Republican majorities in both the House and Senate, it is safe to say that the crypto industry investments paid off.
It wasn’t just backbenchers who fell victim to the flood of crypto cash. For example, Ohio Senator Sherrod Brown lost his reelection bid after the industry diverted millions to his opponent, crypto supporter Bernie Moreno. Similarly, former Rep. Katie Porter struggled against a crypto PAC ad blitz which undermined her Senate primary campaign in California. While these may be two outsized cases, the crypto industry’s influence on Washington's political landscape is undeniable.
In the last election cycle, Democrats experienced marked declines in support from young people, men, and minorities – demographics groups that are more inclined to support and invest in crypto. These are also the same groups that largely distrust big institutions like Wall Street and champion tech innovation across finance. So, why are Democrats ignoring these trends when they themselves share a similar skepticism toward such institutions?
Stablecoins are an ideal place for Democrats to start supporting common sense crypto policies, which are not speculative assets that soar and plunge with each news cycle. Instead, stablecoins trade in lockstep with the U.S. dollar and allow investors to easily transfer their crypto into other currencies as well as practical tasks like sending remittances and paying merchants. By implementing new regulations to protect users, lawmakers could boost the obvious benefits of stablecoins, while eliminating many of the negatives – such as the prevalence of offshore tokens that finance illicit activity and have triggered big losses for U.S. investors.
As campaigns gear up for the 2026 and 2028 elections, crypto super PACs, including the crypto super PAC called Fairshake, already have $116 million in cash on hand and earmarked for candidates who are “committed to advancing innovation, growing jobs, and enacting thoughtful, responsible regulation.” Right now, that doesn’t describe a sizable number of Democrats.
Some still think the party will come to its senses. Former Trump official and self-identified “never-Trumper” Anthony Scaramucci said recently at a crypto industry event that he finds it difficult to believe that the Democrats are not going to be at least crypto neutral by the time the 2026 election season begins.
Let’s hope he’s right.
