A first-of-its-kind bill to regulate parts of the cryptocurrency industry stalled in the Senate on Thursday, after Democrats blocked it amid concerns in their party about how President Trump and his family are profiting from crypto.
On a vote of 48 to 49, the measure failed to muster the 60 votes necessary to advance. It would have regulated so-called stablecoins, a type of cryptocurrency tied to the value of an existing asset, often the U.S. dollar. The vote was a setback for the industry, which has made significant advances in Washington with the backing of Mr. Trump and a bipartisan group of lawmakers.
The legislation has divided Democrats, many of whom were reluctant to back legislation that could benefit Mr. Trump, whose ties to the industry have prompted corruption allegations.
As the stablecoin bill began making its way through Congress, a bipartisan group of senators on the Banking Committee supported it, voting in March to send it to the Senate floor for a full vote. At the time, the measure appeared to be on a glide path toward passage, with proponents confident they would be able to deliver a bipartisan bill to Mr. Trump’s desk over the summer.
But less than two weeks after the banking panel’s action, reluctance began brewing among other Democrats on Capitol Hill when a cryptocurrency firm affiliated with the president’s family, World Liberty Financial, announced it would issue a stablecoin. Democrats’ concerns deepened after the Trump-affiliated firm inked a deal with an Emirati venture fund backed by the government of Abu Dhabi that would grant them $2 billion in deposits.
Democratic backers also had concerns that the bill lacked provisions to crack down on money laundering in the industry or guarantee that bad actors who had been barred from engaging in traditional American financial markets would not be able to use the cryptocurrency to regain a foothold.
But the overriding worry for Democrats, who have labored to figure out how and when to mount an effective resistance to Mr. Trump, was that they could be seen as delivering a victory to the president when they had the opportunity to block the bill.
To move forward in the Senate, the legislation needed 60 votes, meaning at least seven Democrats would have to support pushing it past procedural hurdles and toward a final vote. In the end, none were willing to do so.
Senator Ruben Gallego, Democrat of Arizona and a supporter of the legislation, had made a last-minute appeal to Republicans to delay the vote until Monday.
“Legislation of this scope and importance cannot be rushed,” he said, adding that he and other Democrats wanted more time to review the bill.
“I want to be clear that we do have enough members across the aisle that want to see this pass in a good manner,” Mr. Gallego said.
But his efforts fell short; Republicans insisted on voting on Thursday, saying Democrats would have a chance to modify the bill during debate.
“We’ve done everything we can to accommodate their concerns,” Senator John Thune, Republican of South Dakota and the majority leader, said before the vote. “At some point, they’re going to have to take yes for an answer.”
Mr. Thune switched his vote from a yes to a no so he could try to bring it up again in the future. He said Democrats were “moving the goal posts” in intensive talks over the legislation, suggesting they were simply trying to deny Republicans a win on the issue.
Two Republicans, Senators Rand Paul of Kentucky and Josh Hawley of Missouri, joined Democrats in opposing moving forward with the bill.
Mr. Hawley cited concerns with the involvement of technology companies in the cryptocurrency industry.
“We’ve been working with negotiators for 48 hours now, and I was told that they were getting close to text to include Big Tech prohibitions,” he said. “But they haven’t done it.”
