Investing.com -- A bill aimed at establishing a regulatory framework for U.S. dollar-pegged cryptocurrency tokens, known as stablecoins, faced a setback on Thursday. The legislation failed to clear a key hurdle in the U.S. Senate, dealing a blow to the crypto industry. The sector, which has been advocating for the creation of new rules for digital assets, had spent over $119 million supporting pro-crypto congressional candidates in the previous year’s elections.

Stablecoins are a type of cryptocurrency designed to maintain a constant value, typically a 1:1 dollar peg, and are often used by crypto traders to transfer funds between tokens. Their use has seen rapid growth in recent years, with advocates suggesting they could be used for instant payments. Despite initial optimism that stablecoin legislation was almost certain to pass this year, the bill, known as the GENIUS Act in the Senate, has faced opposition from Democrats.

In a vote on Thursday, only 49 senators voted to advance the bill to a full vote, which is short of the 60 votes needed to formally end debate on the bill. Notably, two Republican senators, Senator Josh Hawley and Senator Rand Paul, voted against moving forward with the bill, aligning with Democrats.

Senator Mark Warner, a Democrat who had previously voted to advance the bill out of the Senate Banking Committee, stated, "While we’ve made meaningful progress on the GENIUS Act, the work is not yet complete, and I simply cannot in good conscience ask my colleagues to vote for this legislation when the text isn’t finished."

A group of Democrats, including Warner, who initially supported the bill, stated on Saturday that Republicans had not negotiated stronger provisions related to foreign stablecoin issues and anti-money-laundering protections. Senate Democrats have expressed concerns about the bill, especially after Trump’s crypto business World Liberty Financial announced last week that its stablecoin would be used by an Abu Dhabi investment firm for its $2 billion investment in crypto exchange Binance.

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