Senator Gillibrand Warns of Risks of 'Weakened' Stablecoin Bill
Gillibrand suggests that the expected stablecoin bill could be passed before August.
Cheyenne Ligon | Edited by Nikhilesh De , Mar 26, 2025 20:32 UTC
What you need to know:
- Sen. Kirsten Gillibrand told attendees at a blockchain summit in D.C. on Wednesday that Congress may be able to pass long-awaited stablecoin legislation before the Easter break.
- Gillibrand cautioned the industry against supporting a “watered-down” version of the bill, stressing the need for strong rules to protect consumers and attract investors.
U.S. Sen. Kirsten Gillibrand (D-N.Y.), a key Democratic backer of crypto legislation, cautioned the industry against pushing a “watered-down” version of the anticipated stablecoin legislation currently pending in the Senate. She said strict regulations are needed to spur innovation and protect investors from banking crises like the one that befell Silicon Valley Bank in 2023 and the collapse of crypto exchange FTX in 2022.
Speaking at the DC Blockchain Summit in Washington, Gillibrand said the bipartisan stablecoin bill, the Guidance and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), includes a number of measures to protect consumers in the event of an issuer's bankruptcy.
“It’s important to consider all the possible scenarios of how this could go wrong. For example, what happens if your 1:1 collateral is in Treasuries and there’s a rate differential like what happened with SVB that causes a spike in your stablecoin and your dollar-dollar collateral ends up in three-month Treasuries that you can’t get out of — that would cause your stablecoin to crash,” Gillibrand said.
If the dollar backing requirement is not met or implemented, Gillibrand said, “You're just going to end up with another FTX. You're going to end up with another algorithmic stablecoin that's going to collapse because it never had any basis in the first place. That's going to be a serious problem for the U.S. market.”
“The worst thing we can do is water down the bill,” Gillibrand said. “Don’t think a watered down bill is going to help your industry. It’s going to destroy it. Because another SVB or algorithmic stablecoin crash is going to create so much uncertainty that no one will want to do business in the United States.”
After years of setbacks, stablecoin legislation appears to be finally moving forward. Earlier this month, the U.S. Senate Banking Committee voted to advance the GENIUS Act to the Senate floor. A similar bill from the U.S. House of Representatives is expected to be introduced on Wednesday.
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