Unchained - Why the Senate Stablecoin Bill Stalled & What It Means for Crypto - Ep.832

Episode Date: May 9, 2025

The crypto industry is fixated on the U.S. Senate. On Thursday, lawmakers failed to advance the GENIUS Act, the most significant federal stablecoin bill to date. But the story isn’t over.  Behind the process is a drama about potential presidential conflicts, shifting political alliances, and unresolved policy questions. In this episode, Kristin Smith, CEO of the Blockchain Association and Amanda Tuminelli, executive director and CLO of the DeFi Education Fund, break down: Why the bill stalled but isn’t dead yet The role Trump’s crypto ties are playing Whether Democrats who once backed crypto are turning away Why advocates are still pushing for a deal this year Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com FalconX Bitkey: Use code UNCHAINED for 20% off Mantle Kristin Smith, CEO of the Blockchain Association Amanda Tuminelli, executive director and CLO of the DeFi Education Fund Timestamps: 👋 0:00 Intro 📉 2:01 Why the Senate blocked the vote but the bill isn’t dead yet 🔄 5:17 Why some pro-crypto Democrats suddenly flipped ⚖️ 8:08 Key differences between the two competing GENIUS Act proposals 🔄 14:18 Whether lawmakers are starting to shift their crypto stances 🤝 16:05 Can the Senate overcome divisions and get this across the finish line? 🏛️ 18:14 How Trump’s crypto ties are shaping the legislative battle ⏳ 20:46 Is the August deadline already slipping out of reach 📝 22:39 Combining stablecoin and market structure bills  🎉 25:59 Why Kristin says it’s a relief not to have to deal with Gensler anymore Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, all, there was so much crypto news that dropped on Thursday that we decided we wanted to do an extra bonus show on why the stable coin bill stalled in the Senate. We did a live stream of my conversation with Kristen Smith and Amanda Tumenelli on Friday morning on YouTube and X. And that is what we are releasing now here. Enjoy. There was a tremendous amount of time at the senator level themselves that they spent over the past few days negotiating this. They're not going to want that to be for no reason. And so I think, you know, we will be able to get this moving forward. And I think regardless of what the text says, even if there's flaws in the text, we want to keep the process going. Because if it turns out that we can't even get a simple stable coin bill through the Senate,

it's going to make it very, very difficult for market structure to follow suit and keep the process alive. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin. This is the May 9th, 2025 episode of Unchained. Bitkey is the Bitcoin wallet from the team behind Square and Cash app. It's the first two of three multi-sig hardware wallet with recovery tools that replace the need for a seed phrase. Get 20% off with code unchained.

Powered by successful products like Mantle Network and M-Eath Protocol, mantle is driving the next phase of OnChane Finance by supporting ecosystem products, such as the Mantle Index 4 or MI4 Fund and mental bank, which brings real world access, yield, and utility to digital assets. An AI that speaks crypto and does the work of a team of analysts. Introducing Focal by Falcon X, bringing in clarity to a world of noise. Visit askfocal.com. All right, so today's topic is the stable coin bill stalemate,

and here to discuss our Kristen Smith, CEO of the Blockchain Association, and Amanda Tuminelli, executive director and CLO of the Defi Education Fund. Welcome, Kristen, and Amanda. It's great to be here, Laura. Thanks for having us. On Thursday, efforts to move the Senate Stable Coin bill forward, which, by the way, it's called the Genius Act, faltered. This follows last Saturday's fight over the bill and several tense days in Congress, with I think probably a lot of negotiating going on. However, this doesn't mean the bill itself has failed. So what was Thursday's vote about? And then we can kind of zoom out to everything else that happened. Yeah, I can jump in on this one because there's a lot of Senate floor process

happening here that I don't think is immediately intuitive to people who don't follow Congress every day. So the important thing to realize is that in the Senate, floor time is a very finite resource. There's only so many days a year that the Senate are in session. And particularly right now at the start of a presidential administration, we have so many different nominees. you know, over 1,200 that need to be confirmed that the Senate is, I think, to quote Senator John Thune, they're an HR factory right now. They're just getting people in places throughout the administration. And so to have a standalone vote on a single piece of legislation is actually very rare and very special. But the other thing about the Senate is that any single senator can object to moving forward with debate.

And so in order to bypass an endless debate on a bill, there is a process whereby they limit the amount of debate to a certain number of hours. And this is called the cloture vote or the motion to proceed. And so what the vote was on Thursday was the motion to proceed on consideration of the Genius Act. This was not a vote on the Genius Act itself. But the threshold to limit debate is 60 votes. There are 53 Republicans. And so what we saw yesterday is all of the Democrats voted against it along with three Republicans. So there were only 48 to 49 or a couple folks missing that day votes.

So we were 12 votes short of the 60 needed to move to consideration of the bill. Because the Democrats are in the minority and they realize that their biggest point of leverage is to get, you know, they're needed for that 60 votes to continue. they did band together. They sent a letter over the weekend that asked for, you know, more time and made additional sort of demands on the legislation. And the negotiations were very, very intense over the past couple of days. So the good news is of those three Republicans that voted no on the bill, one of them was actually Majority Leader, Senator John Thune from South Dakota. And because he voted no for the bill, he has the option to make a motion to reconsider later on. And so whenever a deal is ready and the Democrats are committed to moving forward, they will be able to move forward with the

vote to reconsider. And so I don't think the stalemate is a permanent stalemate. I think this is sort of a temporary phase that will allow the negotiations to continue and that the process will get picked up again sometime later this month. And so I remember last Saturday that people were kind of surprised at some of the Democrats who turned against, you know, the bill at that point, because several of them received quite a bit of donations from crypto lobbying groups in the election. So, you know, why did that switch happen? Yeah, well, I think that the politics is sort of taken over here, right? There are sort of several issues that Democrats have raised that they would like to be addressed in the legislation. One of those is the concern around the Trump family's participation

in the crypto business. You know, back in the last administration, we were fighting for our lives and we would have given anything for an enthusiastic president and leader. Well, we have a very, very enthusiastic president. He loves crypto so much that. his entire family is going into multiple different business lines related to it. And, you know, that is obviously a concern that the Democrats and many others have about, you know, sort of the what might be going on there. And so, you know, I think there's been a lot of Democrats that have had issues about that. I think Senator Holly on the Republican side has been very concerned about big tech going into the stable coin business. So this is like Facebook back in 2019 or perhaps even

rumored this week. And then, of course, there's always anti-money laundering concerns. And a lot of that stems around a misunderstanding of how this technology works. And that's something Amanda and I've been working very closely on to make sure that we don't have provisions that come in that, you know, sort of aim to tackle illicit finance that actually really end up harming the way that blockchains operate. Yeah, just to pick up where exactly where Kristen left off, the Concerns that we understand are happening are around that really seem to be a misunderstanding of how the technology works and how compliance can be done. So, for example, the bill, the genius last draft that we saw, which is from last Friday, had a definition in there for digital asset service providers. And those are people or entities that are able to make available payment stable coins for trade to United States persons.

And the way they define DAS, digital asset service provider, could scope in parts of the technology that could just never be able to comply with the AML obligations in the bill. And we want to make sure that we're protecting the technology, the core technology at issue. So we raise those concerns and they were well received by the drafters of the bill, but we understand that there may just be some misunderstandings going forward on how that technology is talked about in the bill. So one other thing, though, I wanted to ask about the Democrats who eventually voted no. Some of them are even co-sponsors?

Sort of. So there are actually two different genius acts. There is the Genius Act that the Senate Banking Committee marked up and voted on. I think that the bill number is S-394. And then there is the Genius Act that was moved to the cloture vote. What happened is three of the Republican sponsors of the arrest. original bill introduced a new version of the Genius Act. And this is actually important because this is what sort of teed off the process concerns on the Democratic side. And what they did with this new bill,

this S-1582, is that is the bill that was voted on to proceed. And that bill looks different than the bill that came out of committee. So it's very confusing with these two Genius Acts. But the reason, and this all goes back to this floor time, is very scarce, is that a lot, since the bill, had passed out a committee last month. There have been a lot of discussions about changes to make to the bill and that the senators, the Republican authors, did not want to have to make that many changes on the Senate floor. They wanted to be able to incorporate those quickly. So they introduced a new version that was only sponsored by the Republicans. And then they used a procedural tool known as Rule 14. And so the bill was Rule 14, to becomes verb, which means it bypasses the

committee process and this new bill, this genius act, this S-1582 was the one that was voted on with the motion to proceed. And so if you talk to Republicans, they're like, we did that because we wanted to incorporate changes the Democrats wanted, and we wanted to, you know, limit the amount of time needed to get the bill through the Senate floor. If you talk to the Democrats, they say, this is a process foul. We were all on this first bill, not the second bill. And so I think the the problem has been is that this sort of procedural situation has opened the door for the Democrats to come in and bring other political issues to the table. And so, you know, I'm not, I think if it had played out differently, maybe we wouldn't be in this spot, but this is sort of the

spot we're in. And I would say, though, I've, you know, I worked on the Hill for about 10 years, six of which were, it was a staffer in the Senate. And this, this happens all the time. This is not uncommon. There are groups of senators, you know, you'll hear of the gang of six or the gang of eight that sort of band together and try to extract certain concessions in a bill. And so this is, this is how the Senate operates. This is not incredibly abnormal. And so I think that, you know, they will continue to push forward on this. There was a tremendous amount of time at the senator level themselves that they spent over the past few days negotiating this. They're not going to want that to be for no reason. And so I think, you know, we will be able to get this moving forward. And I think

regardless of what the text says, even if there's flaws in the text, we want to keep the process going. Because if it turns out that we can't even get a simple stable coin bill through the Senate, it's going to make it very, very difficult for market structure to follow suit. So we do want to see this succeed and keep the process alive. Bitkey is the only Bitcoin wallet on Time Magazine's Best Inventions List of 2024. Built by the team behind Square and Cash app, BitKee is a two of three multi-signature wallet and the first hardware wallet with an innovative recovery suite that eliminates the need for seed phrases in self-custody. Their new inheritance feature means BitKee's not just the easiest way to self-custody or Bitcoin, it's the easiest way

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so basically those two Democratic senators who co-sponsored the original bill, Senator Kirsten Gillibrand, and Senator Angela also Brooks of Maryland. So basically the one that went to the closer vote was not the one that they were co-sponsoring. Is that how to understand that? Oh, okay. So it's not like they were voting against their own bill.

Yeah, it was a different version. And I do think both of those senators have been very clear that they do want to see that they see the importance of this. They understand that this is critical to U.S. dollar dominance and they want to get it across the finish line. And so I do think they're continuing to work behind the scenes and that we probably need everyone to go home and take a nap for a few hours because they've been working so hard out there. But that I do think, you know, over the weekend and in early next week that the negotiations will continue. Okay. So I guess like the one thing is, you know, there were also some other senators who weren't co-sponsors, Ruben Gallego and Alyssa Slokin, who did receive quite a lot of money and crypto donations. So is it just the same concern they have?

Or do you feel like their kind of interest in supporting crypto has changed? No, I think a lot of this is around process and around the broader politics of the moment. I think, listen, I think when you look at campaign contributions, I've always seen it as more of a relationship development tool. It is not a quid pro quo. very explicitly not a quid pro quo. And as you see here, I think, you know, both of them are very open-minded towards this, but, you know, they are also part of the Democratic Party and they want to, you know, work with their leader and work with Gillibrand and work with others who have been

thinking about this for a long time. And so, you know, I don't, you know, this is, again, I think engaging in campaigns is really more about building relationships and it is about, you know, directly like a quid pro quo for results. And that's probably a good thing for our democracy. But yeah, I think that, you know, listen, I think there's going to be a lot of pressure on senators to figure out a path forward. And, you know, I think there are a lot of phone calls going in. And if you want to make a phone call or send an email, I highly recommend going to standwithcrypto.org. And if you kind of scroll towards the bottom, you can contact your senator. There's an easy link to do so about the Genius Act.

And, you know, we want to get calls and emails in to continue to put the pressure on so that they, they, you know, strike a deal and keep the process going. Okay. So what are the points of contention in the bill? And what are the various ways that you think the two sides could come together to push this forward? Well, I think that's a good question. I think one of the challenging things is we've only seen what senators have spoken about publicly. As I mentioned, concerns about Donald Trump, concerns about big tech, then the concerns about AML, those seem to be the ones that are most talked about publicly. Nobody has seen the latest draft except for the handful of senators that are

in the room. I mean, we've been hearing from other Senate offices who are on the Senate Banking Committee who haven't even seen the compromise they're working on. But, you know, I think as Amanda mentioned, you know, it's a big thing for the industry to look at as the whole process plays, out is, you know, what are these very specific words? How do you define things like a digital asset service provider? What does that encompass? Because these, you know, what we don't want to do is end up passing a legislation bill that does more harm than good. Like, we want it to be something that, you know, promotes the dollar and promotes stable coins, but not at the expense of damaging other parts of the ecosystem. So we're working very closely to make sure that balance stays

intact. And, but, but, you know, as, as Amanda was mentioning, there are some senators who, you know, maybe aren't fully read in on the nuances of how blockchain technology works. And so that is a challenge and something we're looking for. I will just say a positive is that I think the industry has been pretty aligned and standing together and that changes that we would love to see as Kristen was talking about. The people that we have been working with have been collaborative and open to hearing industry feedback. So that has been really positive. But this has been a rare positive moment for the industry to get on the same page and protect the tech at issue, which has been really encouraging. And that's why I think, as Kristen said, the momentum should

continue. We should all be able to keep doing what we have been doing. So as you mentioned earlier, some of the concerns that the Democrats have are about potential conflicts of interest that Trump and his family have with elements of the bill. So where do you think, and it's obviously the Democrats that have concerns about this. So where do you think they're going to take that concern and how might that affect the development of the bill? Yeah, well, we've seen a couple of different solutions put forth by Democrats, both in the House and the Senate that address this. I think the first was Representative Sam McArdo introduced the NEM Act that would prevent presidents from being able to, you know, have a meme coin, not just presidents, but any elected official. We've seen that companion legislation

introduced, I believe it was by Senator Murphy in the Senate. And then we've seen Richie Torres introduce a bill. I believe Elizabeth Warren has done that. So I think that there are, you know, reasonable bills that, you know, can be put in place that would prevent, you know, sort of the, you know, the president from being involved in this business. I think. you know, the challenge is going to be is, if you put that in the bill, is that a poison pill for the White House down the road? You know, I'm sort of of the mindset that like, hey, like if Hunter Biden was going out and selling a bunch of art in exchange for a dinner with Joe Biden, you know, Republicans would be up in arms over that. And so I think that it's probably

fair game to have those on the table. But, you know, I think that's going to be a political question for the bill authors to have to weigh. And Amanda, to you, do you see like a way that that, you know, how do you think that that will impact the push to get this bill passed into law? I think it's, as Kristen has fledged, I think that this is, it is a political issue. And of course, it's policymaking is hard and getting these things across the line is hard. So any new obstacle that comes up is obviously something that is going to at least slow down the process for a little bit. But I think that if we, you know, can all get on the same page about just getting this across the line. It can be worked out. And I, and, you know,

I think that some of the amendments, some of the suggestions are things that people would be open to seeing in the bill. So it should not ultimately stop progress totally. And we've been hearing that this should, or we're hoping that it will be reproposed for a vote before Memorial Day. So hopefully in the next few weeks we'll be able to actually move things forward. And so Donald Trump has said that he would like to see this bill on his desk by August. What do you think the prospects are for getting this done by that deadline? I mean, I think it's a pretty, pretty tough deadline. I don't think it's an impossible deadline, but I would have been a little bit more encouraged if we had gotten a closer vote yesterday to make that, to make that timeline. But, you know, I think we have to realize

about Congress's deadlines, like the August recess or the Christmas, you know, sort of winter break are very powerful in that they force decisions and force compromises. And, you know, this closer vote deadline was a little bit of a false deadline because I think Democrats knew they have the ability to push it out and move forward. But something like the August recess or, you know, the winter break are our moments where we could see a deal come together. And you have to remember, too, there's a lot of ways to get a bill signed into law. At the end of the day, anything that goes to the president's desk, you have to. have a vote on identical language in the House and in the Senate. So what we could see is that perhaps

the House continues down their process and passes something and sends it to the Senate, or perhaps there's an end-of-year package coming together where they put a whole bunch of items in there, and this is a vehicle for carrying forth crypto legislation. This is, you know, whether it be stable coin or market structure or a combination of both, they don't necessarily have to happen in a standalone fashion. But I think it's something that the president had expressed interest in signing standalone, which is why the Senate, you know, is making an effort to sort of move it through the normal process. The normal process is incredibly rare. And so this is, you know, really unique and I think really reflects the importance of crypto as an issue in Washington

today. So we at Unchained reported that Coinbase had been hoping to get a market structure bill done at the same time as the stable coin bill. I'm not sure how that effort is going, but let's talk about two potential possibilities here. So obviously this has come across the stable coin bill has come across a stumbling block. But then there is this possibility that potentially there could be one big beautiful bill that has both elements. What do you think is like the more likely outcome and or what do you think are kind of the pros and cons of the different strategies. Yeah, I mean, I actually kind of think it's a luxury for us to even be sort of arguing about that approach. I think, you know, we want both of those bills to get done and we want them both to be done

in a way that is workable and supportive of the industry here in the U.S. but also is good at protecting consumers and investors. And so I think the important part is let's get the language right. And if they go together or if they go separately, it doesn't matter to me. I think the important part is we want to get it all done. I think the advantage of doing them together comes back to this. Floor time is incredibly precious in the Senate. And so, you know, if they were to be considered in a package that would just take less sort of floor time. But obviously the Senate decided to proceed with sort of a single stable coin vote. That being said, there are a bunch of different ways you can play out the end game here. And I think a lot of it is going to depend on the politics

at the moment, whether or not the language is right for passage. And so I don't think that, you know, we should be focused so much about like the process. I think we should be focused on trying to get the language right. That being said, though, I think this stable coin vote in the Senate is important. We don't want this to stall out for too long. We want to keep the momentum building, even if the language isn't perfect or doesn't include market structure, et cetera, because, you know, I think Donald Trump is not going to continue to be eager to see this on his desk if he sees it as sort of a failing and losing issue. And I think that, you know, this is, we want to keep the pressure on. We want to keep the process going.

And we want to keep refining the content as we go. And I would just add to that because I agree with everything Kristen said. And I just would love to see both of these things get done and for Stablecoin to get done as quickly as possible. but the advantage to them at least being talked about at the same time is that we should have similar definitions across both bills. So if you look at the draft of market structure that was recently released, there's a definition for a permitted payment stable coin. Shouldn't it be the case that the stable coin bill that actually passes is the definition that can be used in market structure, right? We should want that consistency across all of law because what this industry has struggled with for so long is not. having consistent and clear rules. So now that we're at this moment, I am, I am the,

the positive spin for me is like we can have this conversation at the same time and make sure definitions are consistent across law. And for the market structure bill, do you feel that any of these issues around Trump's involvement in crypto entrepreneurial activities will impact that bill as well? I mean, I think it's certainly a possibility. I think, you know, the argument that I'm making is that we want this federal regulatory structure in place so that whatever activities the Trump family may be doing, there is oversight of and insight into those activities. And so, you know, listen, I think it's really interesting. If you remember a year ago when Trump at Marilago had the NFT folks there and he started

talking about being pro-crypto, something incredibly interesting happened. And as Trump became pro-crypto, the Democrats swooped in. and became more pro-crypto. If you remember, we had the vote to overturn Fit 21, et cetera, right? And so when it was a policy issue, the Democrats, it was almost like a race of who could be more pro-crypto. But once the Trump family got in the business of crypto, I think that has been more of an issue for Democrats.

And so, so, yeah, listen, it's certainly something we're keenly aware of. But I would rather have this problem out there of a very enthusiastic Trump family. over having to deal with Gary Gensler any day of the week. All right. Is there anything I haven't asked you guys that you would want to mention? I just would echo what Kristen said about please get involved. Like, please go call your senator. Please tell them that you care about this and you want to see stable coin pass.

I really think that people can make a difference in that way. And I would encourage people who want to see clear rules to reach out and say something. Yeah, I was going to just reiterate, you know, go to stand with crypto.org. If you scroll down to the bottom, you see contact your senator, let them know that you want to see the Genius Act move forward to debate on the Senate floor. And I think that one of our superpowers industry is we're very engaged and very vocal and very active. And so now is the time to make your voice heard. Yeah, by the way, one comment I want to make on that is I remember when you came on the show and you talked about the number of calls they got over the infrastructure bill. And that was four years ago.

So there will probably be recalls now because the industry is a lot bigger. Yeah. We've grown up quite a bit since that time. Yeah. All right. Well, thank you both so much for chatting with us. Awesome. Thanks, Laura.

Thank you.