Hi. Ed here.

Five Democrats. 

Of all the surprising things that happened in the crypto regulatory scene last week, the decision by five Democratic US senators to vote with Republicans on advancing a stablecoin bill tops the list. 

The move was striking given how synonymous crypto has become with President Donald Trump. 

Trump and his family haven’t just launched a flurry of crypto businesses, including a memecoin. The administration’s digital assets czar, David Sacks, also announced the formation of a Bitcoin strategic reserve fund two weeks ago. 

Even more surprising, the Dems gave the so-called Genius Act the green light despite a clinical takedown by Senator Elizabeth Warren, the onetime Harvard Law professor and authority on consumer financial protection. 

In a statement, Warren cited a number of flaws in the legislation. 

Breaking from longstanding legal practice, the bill would permit convicted fraudsters and money launderers to manage stablecoin issuers, she said.

The act fails to address how pariah states such as North Korea and terrorist groups like Hamas may use US dollar-backed stablecoins to fund activities that pose a threat to national security.

As DL News has reported, North Korea is executing an unprecedented hacking operation to steal crypto and fund its nuclear weapons programme. 

Yet the bill, the senator said, will make sanctions evasion easier by not explicitly outlawing stablecoin use by targeted entities, including drug traffickers that smuggle fentanyl into the US.

If that wasn’t enough, Warren said the bill would let companies such as Elon Musk’s X create their own dollar-backed currencies and operate outside the banking safeguards that protect depositors. 

“And anyone who thinks the US taxpayer won’t be called on to bail these guys out is kidding themselves,” Warren said. 

Even with all that, five of the 11 Democrats on the Senate Banking Committee joined the Republican majority and sent the legislation to a floor vote later this spring.

The move speaks volumes about the shifting politics of crypto.

In February, Anthony Scaramucci, the well-connected hedge fund manager and crypto maven, said Democrats are running scared after the industry spent $130 million in the 2024 election campaign and notched big wins. 

As a result, Scaramucci predicted that crypto legislation would fly through Congress this year. 

If last week’s committee vote is anything to judge by, he’s right. 

ICYMI

• North Korean crypto thieves are mimicking terrible traders to bypass detection

  Crypto thieves are pretending to be inexperienced traders — losing thousands of dollars on purpose — in a new method of laundering illicit funds.

• Trump’s crypto embrace ‘sowing the seeds’ of a financial crisis, says Bank of France chief

  President Donald Trump’s sweeping embrace of the cryptocurrency industry is “sowing the seeds” of a financial crisis. That’s according to François Villeroy, the Governor of the Bank of France.

• Trump should scrap Bitcoin reserve for ‘enriching president and donors,’ lawmaker says

  It’s been called “the dumbest idea ever.” It was so bad, Federal Reserve officials almost kicked people out of the room for suggesting it, Perianne Boring, the CEO of The Digital Chamber, said in an interview on YouTube. But that hasn’t stopped President Donald Trump from pushing ahead with plans to build a US crypto reserve

Story of the Week

How North Korea used a bogus stock trading simulator to steal $1.4 billion from Bybit

When the news came through that crypto exchange Bybit had been hacked for $1.4 billion, nobody knew at the time how it could have happened.

The fifth-biggest exchange, which held some $15 billion worth of assets for customers, isn’t known to skimp on security.

Things took a turn when the following week multiple investigations found the hack wasn’t in Bybit’s systems, but rather due to a compromise at Safe Wallet, a popular crypto wallet provider the exchange relied on.

Comment of the Week

When the US Senate Banking Committee voted to advance the Genius Act, a stablecoin bill, to the full chamber last week, Senator Cynthia Lummis, a Republican from Wyoming, countered criticism from Senator Elizabeth Warren.

DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.

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