Stablecoin issuers should face limitations on offering yield-generating opportunities in order to safeguard the traditional banking system, which is responsible for providing home mortgages and loans to small businesses, stated U.S. Senator Kirsten Gillibrand during a summit in Washington, D.C.
At the 2025 DC Blockchain Summit held on March 26, the Democratic senator from New York praised her state for its strong financial regulations, emphasizing that such measures should be embraced across all sectors of financial services.
Gillibrand argued that these regulations must be enforced upon stablecoin issuers, regardless of whether they operate under state or federal oversight, to ensure adherence to existing laws and promote consumer protection. She then shifted her focus to the necessity of safeguarding the banking sector:
“Would you want a stablecoin issuer to have the capacity to provide interest? Probably not, because if they can offer interest, what incentive is there to deposit your money in a local bank? If there’s no incentive to use local banks, who will provide you with a mortgage?”
“Without deposits, small banks become incapable of offering loans; this could lead to the downfall of the financial system that individuals depend on for their mortgages and business needs,” Gillibrand added.
Senator Gillibrand participating in a panel at the DC Blockchain Summit.
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Gillibrand is a co-sponsor of a stablecoin bill aimed at establishing a comprehensive regulatory framework for digital fiat tokens. This legislation was introduced by Senator Bill Hagerty in February.
On March 10, Hagerty revised the bill to incorporate stricter provisions related to anti-money laundering, know your customer (KYC) protocols, financial transparency, and consumer protections.
The Senate Banking Committee advanced the legislation with an 18-6 vote on March 13. It must pass both houses of Congress before reaching the President’s desk for approval.
The 2025 stablecoin legislative framework.
Opponents of the stablecoin legislation argue that it is merely a disguised effort to introduce a central bank digital currency (CBDC) in the United States through privatized processes.
Jean Rausis, co-founder of the decentralized trading platform Smardex, contended that centralized stablecoins enable financial censorship and state surveillance, potentially allowing the government to restrict access to money or exclude individuals from the financial system altogether.
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