What Happened?

The U.S. Senate Banking Committee passed the U.S. Stablecoin Act (GENIUS Act) with a preliminary vote of 18 to 6. The bill will now move on to the full Senate for a vote.

The bill still faces considerable opposition, with clear bipartisan divisions during the Senate Banking Committee’s discussions.

Bankers have also expressed strong concerns about the stablecoin bill, fearing that the widespread issuance and use of stablecoins could cause banks to lose their market dominance.

U.S. Senate Banking Committee Passes Stablecoin Bill

The U.S. Stablecoin Regulatory Bill (GENIUS Act) recently achieved a significant breakthrough in the Senate Banking Committee. The bill, proposed by Republican Senator Bill Hagerty of Tennessee, aims to establish a federal regulatory framework for the issuance of stablecoins in the U.S. The Senate Banking Committee advanced the bill with a vote of 18 to 6, and it will now move on to the full Senate for a vote.

However, the advancement of the bill has not been without challenges, with clear partisan divisions emerging during the Senate Banking Committee’s discussions.

Opponents of the bill, such as Democratic Senator Elizabeth Warren, argued that in addition to the bill’s numerous loopholes, it coincides with reports that the Trump family is in talks with Binance to develop a new stablecoin. She stated, “Advancing the bill while Trump is negotiating with a company notorious for illegal activities makes no sense and will only lead to regret.”

Another opponent, Democratic Senator Catherine Cortez Masto, criticized the Republican members of the committee for lacking comprehensive discussion and debate during the bill’s review process, arguing that the bill is “not yet ready” to become formal law.

Senator Bill Hagerty, a key proponent of the bill, emphasized that the stablecoin bill is the result of bipartisan efforts and that it has incorporated input from Democratic members. He stated that the bill would help protect consumers, promote market competition, and encourage innovation.

“It’s time to provide the clarity and stability that our nation and innovators urgently need,” Hagerty emphasized.

What Are Bankers Concerned About?

In addition to the opposition from certain lawmakers, bankers have expressed strong concerns about the stablecoin bill’s potential to cause “de-banking.” According to a report by American Banker, bankers and their supporters in the Senate are actively exerting pressure to prevent the passage of the stablecoin bill. They believe that the widespread use of stablecoins could cause banks to lose their market dominance in cross-border payments and fund management, thereby weakening the influence of the traditional banking system.

This opposition has received a response from some U.S. Senators. For example, Senator Warren proposed an amendment to ban technology companies from issuing stablecoins and stated that if technology companies wish to engage in payment services, they must collaborate with regulated financial institutions, or else they would disrupt the current financial order. However, this proposal has led to fierce opposition from Republicans, who argue that the issuance of stablecoins could promote competition and drive financial innovation.

Nevertheless, Brian Moynihan, CEO of one of the world’s largest banks, Bank of America, indicated during a public speech that the bank might enter the stablecoin market and launch its own stablecoin product. This suggests that while some banks have concerns about the development of stablecoins, certain banks are actively seeking to incorporate them into their business models and compete for market share.

Sources: Cointelegraph, CoinDesk