- Sen. Gillibrand warns crypto industry against seeking diluted stablecoin legislation, arguing strong regulations protect both investors and innovation.
- The bipartisan GENIUS Act is advancing in Congress, with lawmakers aiming to complete it before August recess.
- Gillibrand believes passing stablecoin legislation first will build momentum for a broader market structure bill for the entire crypto industry.
U.S. Senator Kirsten Gillibrand (D-N.Y.) delivered a stark warning to cryptocurrency industry stakeholders at Wednesday’s D.C. Blockchain Summit, cautioning against lobbying efforts to weaken stablecoin legislation. The Democratic lawmaker, a prominent voice on crypto policy, emphasized that robust regulation is essential to prevent financial disasters similar to the Silicon Valley Bank run and FTX collapse.
Speaking to industry representatives, Gillibrand stressed that the bipartisan stablecoin bill—Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act)—creates critical consumer protections in bankruptcy scenarios.
“You have to think through all the ways this can go wrong. Something as simple as how you define a dollar — is a Treasury the same as a dollar? What happens if your 1-to-1 backing is all in Treasuries and you have an interest rate misalignment like SVB just did, and you have a run on your stablecoin and all your dollar-to-dollar backing is in a three-month Treasury that you can’t get out of – that’s a run on your stablecoin, that’s a collapse,” Gillibrand explained.
The Senator warned that inadequate dollar-backing requirements would inevitably lead to market failures. “You’ll just have another FTX. You’ll just have another algorithmic stablecoin that plunges because it never really made sense. That is a huge problem for the U.S. market,” she said.
Gillibrand’s most forceful comments came when addressing industry pressure for lighter regulatory touch: “The worst thing we could do is water it down. Do not think that a watered-down bill will help your industry. It will destroy your industry. Because one more SVB, one more algorithmic stablecoin [collapse], just continues to create such uncertainty that nobody wants to do business in the United States.”
After years of legislative false starts, stablecoin regulation appears to be gaining momentum. The U.S. Senate Banking Committee recently advanced the GENIUS Act to a full Senate vote. Concurrently, a similar bill from the U.S. House of Representatives was expected to be made public on Wednesday.
Gillibrand outlined a strategic regulatory roadmap, explaining that successfully passing stablecoin legislation would build momentum for a more comprehensive market structure bill. “A market structure bill is much more complex. It regulates the entire industry, not just one version of a digital asset,” Gillibrand said. “So it’s really important that we do this right so we can move to something much bigger, and something we need to build even broader consensus around.”
A comprehensive market structure bill would establish clear regulatory frameworks for cryptocurrency companies and digital asset issuers, particularly regarding whether tokens are classified as securities or commodities—determining their primary regulator.
On the same panel, Senator Bernie Moreno (R-Ohio) offered his perspective on token classification, suggesting a straightforward criterion: “If your digital currency has a CEO it’s not a commodity, by definition,” Moreno stated.
In a separate discussion at the event, Senator Tim Scott (R-S.C.) indicated that future market structure legislation would need to “find a way to create a structure that works beyond the two major categories” of security versus commodity.
Regarding timelines, Moreno ambitiously proposed completing multiple crypto-related bills before the congressional summer break: “I’m gonna lay out the gauntlet — let’s get this done by August recess, what do you think? Markets structure, GENIUS Act, [Strategic Bitcoin Reserve], all done by August,” he challenged.
Gillibrand tempered these expectations, noting that while a market structure bill couldn’t realistically be completed by August, Congress is “definitely going to get stablecoins done” before the summer break—potentially even before the April Easter recess “if we’re really productive.”
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