Gillibrand Warns Crypto Industry Against Diluted Stablecoin Bill

Senator Kirsten Gillibrand, a prominent Democrat advocating for crypto legislation, has cautioned the industry against advocating for a diluted version of the anticipated stablecoin legislation currently progressing through the Senate. She emphasized that robust regulations are essential to promote innovation and safeguard investors from incidents such as the bank run on Silicon Valley Bank in 2023 and the collapse of the crypto exchange FTX in 2022.

During her speech at the D.C. Blockchain Summit, Gillibrand highlighted that the bipartisan stablecoin bill, known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), includes several consumer protections in case of an issuer bankruptcy. She stressed the importance of considering all potential risks, including the definition of a dollar and the implications of interest rate misalignments. Gillibrand warned that if dollar-backing requirements are not met or enforced, the industry could face another FTX-like collapse, which would be detrimental to the U.S. market.

Gillibrand firmly stated that a watered-down bill would not benefit the industry but rather destroy it by creating further uncertainty. She believes that passing the GENIUS Act is crucial for making progress on a more comprehensive market structure bill, which would regulate the entire crypto industry and provide clearer rules for digital asset issuers. This bill would help determine whether tokens are securities and identify their primary regulators.

Senator Bernie Moreno, also speaking at the event, suggested that any digital asset with a centralized issuer is likely to be considered a security rather than a commodity. Senator Tim Scott expressed the need for a market structure that goes beyond the traditional categories of security versus commodity. Moreno set an ambitious goal to pass the GENIUS Act before the August recess, while Gillibrand tempered expectations, stating that while a market structure bill may not be completed by August, stablecoin legislation is likely to be finalized before the summer break, possibly even before the Easter recess in April if Congress is productive.