The US Senate has moved forward with bipartisan legislation aimed at regulating stablecoins, a measure supported by both the crypto sector and President Donald Trump. Following a 68-30 procedural vote on Wednesday, the bill is set to face final approval as early as next week, according to Bloomberg.
Stablecoin Bill Gains Momentum
This advancement comes on the heels of similar progress in the House, where the Financial Services and Agriculture committees have also advanced broader cryptocurrency legislation. Notably, Republican lawmakers successfully defeated attempts to attach amendments aimed at restricting Trump’s potential profits from his crypto ventures.
The stablecoin legislation seeks to establish clear guidelines for digital tokens pegged to traditional currencies, like the US dollar. Proponents believe that regulation will help integrate stablecoins into mainstream payment systems, enhancing their usability and acceptance.
Senate Majority Leader John Thune has expressed optimism about the swift passage of the stablecoin bill, urging the House to expedite its approval and send it to the president’s desk.
Meanwhile, Senate Banking Chair Tim Scott anticipates holding hearings on broader crypto regulations in July, although he expects any comprehensive legislation to emerge in the fall.
Transaction Efficiency Against Credit Card Giants
Supporters of the stablecoin initiative, including Treasury Secretary Scott Bessent, have highlighted the potential for dollar-pegged stablecoins to bolster demand for US dollars and government debt.
Under the proposed legislation, issuers would be required to maintain dollar-for-dollar reserves in assets such as short-term government securities, ensuring regulatory oversight.
Retailers have also been vocal advocates of the bill, hoping that stablecoins will offer more efficient and cost-effective transaction methods compared to existing credit card systems. However, they have sought to attach provisions that would foster competition against major credit card networks like Visa and Mastercard.
Concerns have emerged from smaller banks about the potential impact of stablecoins on deposits and credit availability. In contrast, larger banks are exploring the prospect of issuing their own stablecoins, which could generate profits from the interest accrued on reserve assets.
Concerns Of Issuer Failures
Despite the momentum for the stablecoin bill, criticisms persist. Democrats, spearheaded by Senator Elizabeth Warren, argue that the legislation lacks sufficient consumer protections, leaving customers vulnerable in the event of issuer failures.
Proponents remain hopeful, with Matt Hougan, Chief Investment Officer at Bitwise Asset Management, asserting that successful passage of the legislation could enhance the dollar’s status as the world’s reserve currency. He emphasized, “If we pass stablecoin legislation, dollars will be exported around the world.”
Additionally, Roger Hallam, Global Head of Rates at Vanguard, noted that increased demand for short-term government debt could prompt the Treasury to issue more Treasury bills, thereby alleviating current market tensions regarding future bond issuance.
Featured image from DALL-E, chart from TradingView.com
