According to Cointelegraph, U.S. Senator Kirsten Gillibrand has called for restrictions on stablecoin issuers from offering yield-bearing opportunities, emphasizing the need to safeguard the traditional banking system. Speaking at the 2025 DC Blockchain Summit on March 26, the Democratic senator from New York highlighted the importance of adopting New York's stringent financial regulations across all financial sectors. She stressed that these regulations should apply to stablecoin issuers, regardless of whether they are regulated at the state or federal level, to ensure compliance with existing laws and protect consumer safety.
Gillibrand expressed concerns about the potential impact of stablecoin issuers offering interest, suggesting it could undermine local banks' ability to provide essential services like home mortgages and small business loans. She warned that if stablecoin issuers offer interest, there would be little incentive for consumers to deposit money in local banks, which could destabilize the financial services system that many rely on. "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," she stated.
Gillibrand is a co-sponsor of the GENIUS stablecoin legislation, introduced by Senator Bill Hagerty in February. This bill aims to establish a comprehensive regulatory framework for digital fiat tokens. On March 10, Hagerty updated the bill to include stricter anti-money laundering provisions, know your customer (KYC) requirements, financial transparency regulations, and consumer protection controls. The Senate Banking Committee advanced the GENIUS bill with an 18-6 vote on March 13. The bill must pass both chambers of Congress before reaching U.S. President Donald Trump's desk for signing.
Critics of the GENIUS stablecoin bill argue that it is an attempt to introduce a central bank digital currency (CBDC) in the United States through privatized means. Jean Rausis, co-founder of the decentralized trading platform Smardex, contended that centralized stablecoins could lead to financial censorship and state surveillance, potentially allowing the government to restrict access to financial systems. The debate over stablecoin regulation continues as stakeholders weigh the implications for the future of digital currencies and traditional banking.
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