The U.S. Senate’s new digital assets subcommittee held its first-ever hearing on stablecoin and market structure legislation

Wednesday saw the Senate Banking Committee’s new digital asset subcommittee hold its first hearing on Exploring Bipartisan Legislative Frameworks for Digital Assets.

The U.S. Senate’s new digital assets subcommittee held its first hearing on stablecoin and market structure legislation, while the CEO of the market-leading stablecoin believes his competitors are plotting a murder.

The Senate Banking Committee’s subcommittee on digital assets began rolling this year with a session titled Exploring Bipartisan Legislative Frameworks for Digital Assets.

The Senate is currently contemplating several legislative proposals addressing digital assets, including a planned market structure bill similar to last year’s FIT21. But the immediate focus is squarely on stablecoins.

In the Senate, there’s the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act introduced by Sen. Bill Hagerty (R-TN). There are two stablecoin bills in the House, the GOP-led Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, and the ‘bipartisan’ discussion draft introduced last week by Rep. Maxine Waters (D-CA) based on work she and now-retired Rep. Patrick McHenry (R-NC) did in the last Congress.

We’ll get to the hearing in a moment, but we first want to highlight some interesting chatter that emerged in the days before the Senate hearing. On February 24, Vance Spencer, co-founder of crypto-friendly venture capital group Framework Ventures, tweeted a claim that the “soon-to-be revealed stablecoin markup apparently has requirements to shut off access to the [U.S. Treasury bill] market to centralized international stablecoin issuers.”

Spencer called this alleged plan “a blatant attempt at regulatory capture by U.S. players done at the expense of U.S. national interest … The largest stablecoins today are built overseas, and the largest source of demand is overseas … The future of stablecoins can be U.S. dollar based only if we allow a broader competitive set of stablecoin issuers to flourish and deny gatekeeping/gaslighting by those interested in regulatory capture[.]”

It’s no secret that the stablecoin bills currently up for discussion appear intended to favor U.S.-based Circle—issuer of the USDC stablecoin via a partnership with the Coinbase (NASDAQ:COIN) digital asset exchange—at the expense of USDT, the highly controversial market-leading stablecoin issued by Tether.

The day before the hearing, Bloomberg quoted Circle CEO Jeremy Allaire saying stablecoin legislation “is the first priority” of President Donald Trump’s administration. But Allaire claimed that there shouldn’t be a “free pass” for stable issuers who “just ignore the U.S. law and go do whatever the hell you want wherever and sell into the United States.” Issuers looking to offer dollar-denominated stables in America “should need to register in the U.S. just like we have to go register everywhere else.”

Coinbase CEO Brian Armstrong recently stated a goal of making USDC the “number one dollar stablecoin” while suggesting that Coinbase would delist USDT should the U.S. approve regulations with which Tether is unable to comply. Coinbase and other exchanges have already delisted USDT in Europe to comply with the EU’s Markets in Crypto-Assets (MiCA) regulations.

Those at Circle/Coinbase aren’t the only ones targeting Tether’s dominance. On February 25, Bloomberg quoted PayPal (NASDAQ:PYPL) execs saying they’re looking to expand merchant usage of PYUSD, the dollar-denominated stablecoin the company launched in August 2023.

PYUSD currently claims a market cap of just $700 million, down from $1 billion shortly after its launch, but the company hopes to reverse that slide in part by making PYUSD available through Hyperwallet, the platform that PayPal acquired in 2018. Hyperwallet focuses on payments for “marketplace sales, commissions, insurance settlements, charities, clinical study reimbursements, airlines, and employee benefits.” The plan is for Hyperwallet to begin offering a PYUSD option by mid-year.

It’s not just crypto operators who are making a move, as Bank of America (BoA) CEO Brian Moynihan said this week that his firm might issue its own dollar-denominated tokens linked to dollar deposit accounts. According to Moynihan, if they make that legal, we will go into that business, although “what it’s useful for is going to be interesting.” (We’ll say.)

And don’t expect BoA to be a banking-stable outlier for long. Earlier this month, Federal Reserve Governor Christopher Waller said, “a U.S. regulatory and supervisory framework … should allow both non-banks and banks to issue regulated stablecoins.”

Tether finds more friends in Trump’s inner circle

While Waters has been emphatic in her desire to keep Tether out of a U.S. regulated stablecoin market, all the bills currently circulating would impose conditions that Tether has steadfast