Banks push to block stablecoin legislation over market share fears

Bankers and their allies in the US Senate are pushing back against the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act over fears that stablecoins will disintermediate banks and erode banking market share.

According to an article from American Banker, the bill requires 60 votes to pass in the Senate, meaning that at least seven Democrats will have to vote with Republicans to push through the Act.

This could prove a difficult proposition, as US Senator Elizabeth Warren, one of crypto’s staunchest political critics, is proposing an amendment prohibiting tech firms from issuing stablecoins. Warren wrote:

“If these firms want to engage in payments, they must partner with, or facilitate transactions among, regulated financial institutions. But this stablecoin bill breaks that status quo by green-lighting big tech companies and other commercial conglomerates to issue their own stablecoins.”

Digital assets continue to be a disruptive force in finance and banking due to near-instant settlement times and cheaper transaction fees, which significantly reduce the burden of cross-border payments and introduce peer-to-peer transactions.

Related: The GENIUS stablecoin bill is a CBDC trojan horse — DeFi exec

Stablecoins: The way forward for USD in the 21st century?

The GENIUS stablecoin bill was introduced by Senator Bill Hagerty on Feb. 4 as a comprehensive regulatory framework for tokenized US dollars.

Shortly after the bill was introduced to the US Senate, Federal Reserve Bank Governor Christopher Waller said non-banks should be allowed to issue stablecoins.

Waller argued that stablecoins could expand payment use cases, particularly in the developing world, due to their cost-savings and efficiency.

Bank of America CEO Brian Moynihan told an audience at the Economic Club of Washington DC that the bank may enter the stablecoin business — likely launching its own dollar-pegged stable token.

During the first White House Crypto Summit on March 7, Treasury Secretary Scott Bessent said the US will use stablecoins to extend US dollar dominance.

Overcollateralized stablecoin issuers are collectively the 18th largest buyers of US government debt in the world — putting these firms ahead of countries like Germany and South Korea.

By adopting pro-stablecoin policies and promoting stablecoin usage worldwide, the US government can use stablecoins as a sponge to soak up inflation and protect the dollar’s status as the global reserve currency.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom