The US stablecoin bill has been rejected; is the current alt season just a flash in the pan?

Author: Lawrence, Mars Finance

Introduction: A 48:49 "political ambush", the undercurrents beneath the blueprint of the crypto empire.

On May 9, 2025, beneath the dome of Capitol Hill in Washington, a vote that was supposed to be recorded in the annals of cryptocurrency history came to a dramatic halt with a vote of 48 to 49. The "GENIUS Act," strongly advocated by Trump—legislation aimed at establishing a federal regulatory framework for stablecoins—failed to pass due to a collective defection from the Democrats.

Meanwhile, Ripple's five-year lawsuit with the SEC has ended in a settlement, but it has been thrust into the spotlight due to allegations of benefiting the Trump family's interests.

At this moment, the cryptocurrency market is experiencing a strange "split": Bitcoin has broken through the $100,000 barrier, while altcoins like DOGE and SHIB have surged over 300% in a single week, with retail investors celebrating and institutions taking a wait-and-see approach. However, when a regulatory vacuum collides with political maneuvering, is this altcoin season, driven by the "Trump concept coin," a prelude to a new cycle, or a bubble created by rent-seeking power?

Chapter One The Death of the Bill: A Political Sniper Attack Against Trump

1.1 From Cross-Party Consensus to Party Rupture: The 24-Hour Life and Death of the GENIUS Act

Time rewound to February 2025, the "GENIUS Act" emerged with a stance of "bipartisan consensus." Its core design is ingeniously crafted: it allows compliant institutions to issue stablecoins backed by 100% USD reserves, publicly disclosing asset composition monthly, and requiring mandatory audits for market capitalization exceeding $50 billion. The Republican Party views it as the cornerstone of "digital dollar hegemony," while the Democratic Party values the consumer protection provisions. The two sides once passed the preliminary review in the Senate Banking Committee with a rare occurrence of 5 Democratic defections.

However, the turning point came on May 6. Democratic Senator Jeff Merkley introduced the "Ending Crypto Corruption Act," calling for a ban on the holding of crypto assets by the president, members of Congress, and their relatives.

This "sniping at Trump" clause instantly ignited the powder keg - according to the Wall Street Journal, the Trump family issued USD1 stablecoins through World Liberty Financial (WLFI) and struck a $2 billion deal with the UAE sovereign fund, with his personal crypto assets accounting for nearly 40% of his net worth. Democratic leader Chuck Schumer further pressured colleagues in a closed-door meeting: "We cannot let Trump’s family treasury be cloaked in legitimacy."

1.2 The Struggle for Power Distribution: The "Cryptographic Cold War" between Federal and State Authority

The surface controversy of the bill lies in anti-corruption, but in reality, it conceals the power struggle between the central and local governments. The Republican Party advocates for federal-led regulation, allowing agencies to apply directly for national licenses; the Democratic Party insists on retaining the states' scrutiny over foreign issuers, attempting to limit the expansion of Trump-affiliated enterprises through decentralized regulatory power. This game is more hidden in the technical terms: the Democrats forcibly included a monitoring clause stating that "on-chain transfers over $10,000 must be reported," which developers mockingly referred to as "replicating the KYC tyranny of traditional banking in the DeFi world."

Ultimately, the vote on May 9 became a victim of the two-party struggle. Republican leader John Thune even "strategically voted against it" just to preserve the opportunity to reintroduce the bill in the future.

Behind this farce is the harsh reality that cryptocurrency regulation has completely devolved into a political bargaining chip.

Chapter Two: The Conclusion of the Ripple Case: The "Revolving Door" Behind the Settlement

2.1 From $125 million to $50 million: SEC's "strategic withdrawal"

On the same day the bill failed, Ripple reached a settlement with the SEC: the former only pays a fine of $50 million and does not have to acknowledge the securities nature of XRP. This outcome was described by CEO Brad Garlinghouse as "a victory for the industry," but a closer examination of the terms is intriguing— the SEC dropped personal accountability for Ripple executives and allowed them to continue selling XRP to institutions. This stands in stark contrast to the tough stance taken against Coinbase in 2023.

2.2 Trump's "Crypto Tsar" and the Revolving Door Cloud

The turning point of the case is closely related to David Sacks, the "Crypto Policy Coordinator" appointed by Trump. This person has publicly claimed that "XRP is not a security" and has advocated for the legalization of tokens such as SOL and ADA.

What is even more intriguing is that Sacks has multiple interests associated with WLFI: his founded Craft Ventures has invested in TrumpCoin under WLFI, and the USD1 stablecoin issued by WLFI is the core settlement tool of the Ripple cross-border payment network.

Democratic Senator Richard Blumenthal pointed out sharply: "This is not just a regulatory compromise, but a collusion between power and capital." When technological compliance gives way to political alignment, the so-called "decentralization belief" has long been reduced to a tool for interest groups.

Chapter 3 Shanzhai Season Carnival: The "Dangerous Game" in a Regulatory Vacuum

3.1 The Surge of Meme Coins and Trump's "Wealth Machine"

As the bill faces obstacles, the crypto market stages an absurd scene: Trump tokens surge over 30%, and several altcoins related to Trump, such as Pnut, experience violent increases.

Behind this is the "positive feedback loop" carefully designed by WLFI: raising coin prices through policy releases → attracting retail investors to take over → using profits to lobby politicians → promoting more relaxed regulations. This kind of "political + financial" hybrid manipulation makes traditional insider trading seem insignificant.

3.2 Institutional Funds' "Cold Eye Observation"

In contrast to the frenzy of retail investors, institutions like Goldman Sachs and Fidelity have chosen to stay put. According to Goldman Sachs' estimates, the failure of the bill has resulted in at least $12 billion in institutional funds being delayed from entering the market.

Circle CEO Jeremy Allaire admitted: "Without a federal license, we operate like we are in 50 different countries." This fragmentation exacerbates market vulnerability—when 90% of stablecoin transactions still rely on offshore issuers like Tether (USDT), any black swan event could trigger a systemic collapse.

The Democratic Party's insistence on "anti-corruption first" and the Republican Party's advocacy for "innovation first" are actually two sides of the same coin. On one hand, allowing stablecoins to grow unchecked may undermine the dominance of the dollar (as seen with Tether's offshore dollar system); on the other hand, overly politicized regulation will stifle technological revolution.

This contradiction reaches its peak in Trump's "Crypto Empire": WLFI wants to become a "digital dollar agent" through the USD1 stablecoin, while also harvesting retail investors through Meme coins to complete capital accumulation.

Conclusion: When technology no longer waits for policy

The failure of the "GENIUS Act" reveals a deeper paradox: blockchain technology is reconstructing financial rules through code, while lawmakers remain immersed in the old order of power struggles. Satoshi Nakamoto etched in the genesis block, "Times headline: Chancellor on brink of second bailout for banks," perhaps serves as a prophecy for today—when traditional power structures cannot resolve their own corruption, technology will ultimately pave new paths.

Can the fireworks of the Shanzhai season illuminate the road ahead? The answer lies not in the halls of Congress in Washington, but in the code written by every developer. After all, the true spirit of cryptocurrency does not rely on anyone's forgiveness, but on creating immutable rules.