US Senator Kirsten Gillibrand Warns Crypto Leaders Not to Push for a "Watered-down" Stablecoin Bill

US Senator Kirsten Gillibrand believes the stablecoin bill introduced by Senator Bill Hagerty in February presents necessary restrictions and regulations on stablecoin issuers

United States Senator Kirsten Gillibrand expressed her support for the critical role of Senator Bill Hagerty's stablecoin bill, introduced in February, in imposing necessary constraints and regulations on stablecoin issuers. In March, Hagery amended the draft to integrate stricter anti-money laundering (AML) enties, enhanced know-your-customer (KYC) requisites, increased transaction transparency, and a heightened level of oversight.

"Senator Hagerty has been working diligently to add critical provisions to his bill, which are essential for investor protection and attracting the necessary capital into our financial system," Gillibrand stated at the 2025 D.C. Blockchain Summit in Washington, D.C. on Thursday.

"It's crucial that we do not allow the bill to be watered down. A weaker bill would diminish investor confidence and ultimately jeopardize the entire financial services system by diverting funds from community banks, which are the backbone of our economy in providing essential services and credit to small businesses and consumers."

Gillibrand further advised against placing excessive burdens on banks. She suggested that stablecoin issuers should not be offering yield-bearing opportunities, as it would create an unfair competitive disadvantage for banks, who are already subject to significant capital requirements and regulations.

"We need to ensure that stablecoin issuers maintain a full, one-to-one backing with U.S. Treasury securities or other secure assets, and that we quickly establish clear rules for consumer protection in the case of an issuer bankruptcy," Gillibrand continued.

"If we fail to meet the dollar-backing requirements or create a proper regulatory framework, there could be significant consequences. We could see a rapid outflow of capital from the U.S. financial system, as investors become hesitant to invest in institutions that are not subject to sufficient oversight."

As these new regulations come into effect, leading cryptocurrency firms are taking steps to comply. In a recent development, Tether, the issuer of the USDT stablecoin, has engaged in discussions with one of the Big Four accounting firms to carry out a large-scale audit of its operations.

The Senate Banking Committee approved the bipartisan cryptocurrency bill, known as the GENIUS Act, in a vote of 18-6 on Wednesday. The bill, which combines several cryptocurrency bills passed by the House Financial Services Committee earlier this year, aims to create a comprehensive regulatory framework for the digital asset industry.

The bill now advances to the full Senate for further consideration. If passed by both chambers of Congress, the legislation will be sent to President Donald Trump for his signature.