Schumer, Democrats Split on Stablecoin Bill as Tether Concerns Grow

Senate Minority Leader Chuck Schumer is urging Democrats to hold off on publicly supporting the GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act, a key piece of stablecoin legislation, according to a recent report from Punchbowl News. Schumer reportedly wants to retain leverage for future negotiations with Republicans, particularly regarding the treatment of Tether, the largest stablecoin issuer.

In March, Axios reported that Democrats, including Senator Elizabeth Warren, proposed amendments targeting national security and illicit finance risks in the bill. One controversial amendment sought to ban foreign-issued stablecoins in the U.S.—a move that would directly impact Tether, which is domiciled in El Salvador. However, this proposal was rejected by Republicans, and the bill advanced through the Senate Banking Committee.

While Republicans aim to bring the bill to a full Senate vote before Memorial Day, internal divisions among Democrats are now threatening progress. Politico noted that some crypto-friendly Democrats, whose votes are essential, have grown skeptical of the bill’s final language. Arizona Senator Ruben Gallego is among those expressing hesitation, signaling potential trouble ahead.

The discord reportedly came to a head during a recent Senate Democratic lunch, exposing a growing rift over crypto regulation strategies. The GENIUS Act is seen as a pivotal step toward regulatory clarity for the U.S. stablecoin market, but mounting political friction could delay or derail its advancement.

The bill’s outcome is being closely watched by the crypto industry, especially as Tether continues to dominate stablecoin circulation. A restriction on foreign stablecoins would reshape the U.S. crypto landscape and redefine market dynamics as lawmakers debate the future of digital dollar alternatives.