Another setback for Trump’s policies: the Senate blocks the crypto bill

The Trump administration identified this possibility and regulated it last year through the Genius Act. The Act, which is already in force, regulates payment stablecoins – tokens designed to maintain a stable value against the dollar. It sets out who may issue them, requires liquid reserves (including cash, bank deposits and Treasury bills with a residual maturity of no more than 93 days) amounting to at least 100 per cent of the tokens in circulation, and introduces transparency, redemption and anti-money laundering obligations. The relationship is simple: the more stablecoins are issued, the larger the reserves must be, and the higher the demand for T-bills may become. This mechanism stems directly from the Genius Act.

The Clarity Act – which has stalled in the Senate – was intended to complete the regulatory framework by encouraging greater adoption across the sector, thereby also providing a further boost to stablecoins. More specifically, the bill sets out when a token should be considered a security – and therefore subject to SEC regulation – and when it should be treated as a digital commodity, and thus fall under the supervision of the CFTC. It also regulates the operation of exchanges, brokers, spot markets, asset custody and the segregation of client funds – matters already governed in Europe by the MiCA Regulation.

Pressure from the banks also weighed on the negotiations, as they were concerned that the rewards offered on stablecoins could turn them into direct competitors to bank deposits. The Genius Act prohibits stablecoin issuers from paying interest, but does not completely rule out rewards offered by exchanges and platforms. The attempt to limit these forms of remuneration has become one of the most controversial aspects of the Clarity Act.

“The failure to make progress on the Clarity Act undoubtedly represents a setback for the digital asset sector in the United States, but it appears to be more of a further delay than a definitive halt,” explains James Butterfill, head of research at CoinShares. “ “The most critical factor is that the obstacles still to be overcome now appear to be primarily political rather than technical in nature, despite the significant efforts made to reach a compromise acceptable to both Democrats and Republicans.”

This failure deprives Trump of a legislative victory he had personally championed, just as the election campaign is set to dominate Congress’s agenda. With the Clarity Act set to take a back seat, the President loses the opportunity to dominate the agenda with a favourable outcome and leaves more room for more awkward issues, starting with the new congressional initiatives linked to the Epstein files.