Senate Democrats on Tuesday blocked legislation to create a new regulatory framework for cryptocurrency, stalling an industry-backed effort to place new guardrails around digital assets after demanding more limits on President Donald Trump’s investments.
The 49-50 vote on whether to move forward with the legislation was a pivotal election-year test for the $2.3 trillion cryptocurrency market as the industry has pushed aggressively for a uniform set of rules. The Senate debate came as cryptocurrency companies have become a major political force, and as Trump has amassed significant wealth in crypto while in office.
While some Democrats are friendly toward the industry and support the idea of regulation, they have been adamant that the bill include strong ethics safeguards to prevent the president and his family from enriching themselves while he’s in office. The opposition appears to have only solidified two months before the midterm elections, despite significant donations that crypto groups have given to some Democrats in recent years.
“Let’s make sure that we do not pass a crypto bill that will let Donald Trump continue to rake in billions of dollars in crypto profits while working families across this country struggle to deal with higher prices and an economy that gets worse by the day,” said Massachusetts Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee.
Trump had agreed to some changes
As Democrats made clear they would block the bill, Trump agreed to some concessions on ethics, including new restrictions on federal elected officials from issuing digital assets like the presidential meme coins he and his wife, Melania, launched before he took office for his second term. He agreed to new concessions Sunday, such as additional powers for state attorneys general that Democrats had sought to enforce the crypto measures.
Those concessions were not enough for Democrats, who said the latest Republican proposal did not have enough enforcement. They also wanted a requirement for Trump or any future president to divest if holdings reach a certain value.
The latest version of the legislation “leaves a lot to be desired,” said Arizona Sen. Ruben Gallego, who was involved in last-minute talks with Republicans on the bill.
Democrats sent a counteroffer late Monday that would have expanded the ethics provision, but they were not able to strike a final deal. Republicans needed Democratic support to win the 60 votes necessary to move forward on the bill in the 53-47 Senate.
North Carolina Sen. Thom Tillis, a Republican who worked with Gallego to strengthen the ethics provision, said before the vote that he was pleased with Trump’s latest concessions.
“We’re so close,” Tillis said. “It’s just a shame to not take this opportunity.”
Trump has amassed big crypto profits
Trump’s family has raked in big profits in the crypto sector since he was re-elected, including the meme coin, announced the day before Trump took office. Top investors were invited to a private reception with the president.
Trump’s family also has a controlling stake in World Liberty Financial, a crypto firm co-founded with the president’s special envoy Steve Witkoff. Trump reported more than $500 million in revenue from World Liberty Financial sales of crypto products, including “governance tokens,” in his annual disclosure report filed with the Office of Government Ethics. That is a significant share of the more than $1.4 billion that the president reported from crypto businesses last year.
A measure enacted into law last year regulating stablecoins, a type of cryptocurrency, barred members of Congress and their families from profiting off them, but it did not extend to Trump or his family.
Crypto firms want legal certainty
Republicans who have been working on the legislation for more than a year say it could now stall indefinitely. The House and Senate will be out of session during October and before the elections, and the dynamics could significantly shift if Democrats win back the majorities of the House or Senate, or both, in November.
Republican Sen. Cynthia Lummis of Wyoming, a lead sponsor of the bill, said beforehand that a no vote means “opposing real ethics reforms on politicians’ personal investments, handing American leadership in digital assets to our foreign competitors, and leaving Americans with zero protections in the digital asset markets.”
Supporters say the legislation aims to give the industry more legal certainty and protect consumers by creating a broad set of guardrails and regulatory requirements, including better enforcement to prevent bad actors and protections to prevent a market collapse.
Crypto cash flooded campaigns
Opponents, mostly Democrats, say the bill is a giveaway to the industry as crypto companies have become generous donors to candidates in both parties around the country.
“It’s no secret that they are seeking to ram a bill through Congress based upon not the merits of the bill, but the threat that they will spend even more money in elections against people who vote against it,” said Democratic Sen. Chris Murphy of Connecticut.
In 2024, the crypto industry spent more than $130 million in congressional races, including $40 million in Ohio and $10 million each in Arizona and Michigan.
“DC received a clear message that being anti-crypto is a good way to end your career, as it doesn’t represent the will of the voters,” Brian Armstrong, the CEO of Coinbase, the nation’s largest crypto exchange, wrote in a social media post the day after the 2024 election.
