- Senator Gillibrand supports the stablecoin bill with stricter regulations and warns against diluting its protections.
- Amendments include tougher AML, KYC, and transaction transparency rules to safeguard consumers.
- Gillibrand argues that allowing stablecoin yield products could harm local banks by diverting deposits needed for loans and mortgages.
US Senator Kirsten Gillibrand believes the stablecoin bill introduced by Senator Bill Hagerty in February presents necessary restrictions and regulations on stablecoin issuers and warned crypto leaders not to push for a “watered-down” version.
Gillibrand is referring to the updated version of the stablecoin bill, which was amended on March 10. Hagery amended the draft to incorporate stricter anti-money laundering checks, know-your-customer (KYC) requirements, more transaction transparency and oversight, etc.
Oh No, The Poor Banks
Speaking at the 2025 DC Blockchain Summit in Washington, DC, Gillibrand remarked that these additions are necessary to protect consumers and attract investors.
The Senator warned that a weakened bill would undermine investor confidence and jeopardise the entire financial services system by diverting funds away from local banks. She also said stablecoin issuers should not offer yield-bearing opportunities because, again, it wouldn’t make sense for banks:
Do you want a stablecoin issuer to be able to issue interest, probably not, because if they are issuing interest, there is no reason to put your money in a local bank. If there is no reason to put your money in a local bank, who is going to give you a mortgage? If there is no deposit, small banks cannot do that anymore; it will collapse the financial services system that people rely on for their businesses and mortgages.
Kirsten Gillibrand, US SenatorTighten Up
The Senator also highlighted that stablecoin issuers must maintain a robust, one-to-one backing with secure assets, such as US Treasuries, and establish clear rules for consumer protection in the event of an issuer bankruptcy.
She pointed out the potential risks if dollar-backing requirements are not met:
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.
Kirsten Gillibrand, US SenatorAs these restrictions unfold, stablecoin issuers are looking to comply with regulators. For instance, Tether (USDT) recently started talks with one of the big four accounting firms to undergo a massive audit.
Related: Bitcoin Bullish: $110K Peak More Likely Than $76K Dip, Says Hayes
The Senate Banking Committee advanced the GENIUS Act in an 18-6 vote on March 13. The bill now awaits passage by both chambers before being sent to President Donald Trump for signing.
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