The Senate passed groundbreaking legislation on Tuesday to establish a regulatory framework for stablecoins, a type of cryptocurrency tied to the value of the U.S. dollar. The bipartisan bill, sponsored by Senator Bill Hagerty of Tennessee, aims to boost demand for U.S. Treasury securities and help maintain the dollar’s global dominance. The 68-30 vote marked the first time the Senate has approved major cryptocurrency legislation.
The bill still needs to pass the House and be signed by the president to become law. Senator Hagerty emphasized that the bill represents a significant step toward breaking down barriers between traditional financial markets and decentralized markets. He said it would help bring the country’s financial system into the modern era.
However, some Democrats objected to the measure, warning that it lacked strict enough regulations or oversight to prevent abuses. Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, has consistently warned that the bill does not place sufficient guardrails on stablecoin and alleged that the legislation would “supercharge” corruption.
Groundbreaking stablecoin regulations approved
Despite these concerns, the Senate passage is a major victory for the cryptocurrency industry, which has long sought federal oversight and legitimacy. The industry has engaged in an aggressive lobbying campaign to transform its image from a scandal-plagued experiment to a legitimate financial sector. The bill now moves to the House for consideration.
House Majority Whip Tom Emmer has called for the chamber’s Financial Services Committee to advance stablecoin legislation by the end of July. If passed, the legislation could have significant implications for the financial system. It would give hundreds, perhaps even thousands, of American companies the ability to issue their own currencies, potentially bypassing the banking system and credit card networks.
Critics warn that this could unleash economic chaos, similar to the turbulent banking system of the 19th century that led to bank failures, personal bankruptcies, and financial instability. They argue that lawmakers should carefully weigh the benefits against the potential for widespread financial instability before making America a testing ground for this potentially destabilizing experiment in financial innovation.
