Key Information

• Senator Kirsten Gillibrand addressed attendees at the D.C. Blockchain Summit, suggesting that Congress might enact the awaited stablecoin legislation before the upcoming Easter recess.
• Gillibrand emphasized the industry’s need to avoid a diluted version of the bill, asserting that rigorous regulations are essential for consumer protection and investor attraction.

Legislative Perspective

In her address, Gillibrand noted:

“You have to think through all the ways this can go wrong… Something as simple as how you define a dollar… a run on your stablecoin… that’s a collapse.” (Translation: You need to consider all possible failures. The definition of a dollar can affect stability, potentially leading to catastrophic failures in stablecoin investment.)

Gillibrand expressed that if dollar-backing conditions are ignored, the market might see scenarios similar to the collapses of FTX or other previous market failures:

“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.”

The bipartisan stablecoin initiative — the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) — is seen as a pivotal step in establishing consumer safeguards amid issuer insolvencies.

Future Directions

Interestingly, if the GENIUS Act becomes law, it may pave the way for a broader market structure bill, which would regulate the cryptocurrency industry comprehensively.

Gillibrand emphasized the importance of getting the legislation right to facilitate further regulatory development for the cryptocurrency industry.