At the 2025 DC Blockchain Summit, Senator Kirsten Gillibrand warns against granting stablecoin providers privileges reserved for traditional financial institutions.
Stablecoin Issuers Are Not Banks, Says New York Senator
U.S. Senator Kirsten Gillibrand (D-NY) said stablecoin issuers should not be eligible for Federal Deposit Insurance Corporation (FDIC) protections, emphasizing that they are not banks and should not be treated as such. The remarks came during her appearance at the 2025 DC Blockchain Summit held on March 26 in Washington, D.C.
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Speaking to an audience of policy makers, technologists, and financial leaders, Gillibrand underscored the importance of distinguishing between stablecoin platforms and traditional banks, particularly when it comes to regulatory safeguards.
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Protecting Traditional Finance from Unregulated Yield Products
Gillibrand voiced concern over stablecoin issuers offering yield-bearing products that could compete with conventional banking services like savings accounts, mortgages, and small business loans.
“Do you want a stablecoin issuer to be able to issue interest? Probably not,” Gillibrand stated. “Because if they are, there’s no reason to put your money in a local bank. And if there’s no reason to deposit in a local bank, who gives you a mortgage?”
The senator warned that such competition could undermine community banks, which are often the backbone of regional lending for homeowners and small business owners.
Call for Unified Regulation Across Financial Sectors
Praising her home state of New York for its stringent financial regulations, Gillibrand advocated for applying consistent standards across all financial service providers, whether digital or traditional.
She argued that stablecoin issuers, regardless of whether they operate under state or federal charters, should adhere to existing laws to ensure consumer safety and legal compliance. New York has long been recognized as one of the most proactive states when it comes to crypto and fintech regulation.
The GENIUS Bill: A Framework for Stablecoin Oversight
Gillibrand is also a co-sponsor of the GENIUS Act—a legislative proposal introduced by Senator Bill Hagerty in February. The bill, formally known as the Guaranteed Electronic Network for Issuance of United States Stablecoins, aims to establish a comprehensive regulatory framework for stablecoins and other fiat-backed digital tokens.
Following a round of revisions on March 10, the bill now includes enhanced Know Your Customer (KYC) protocols, anti-money laundering safeguards, and financial transparency mandates.
On March 13, the Senate Banking Committee approved the GENIUS bill in an 18–6 vote, signaling growing bipartisan support. The legislation now awaits a full floor vote in both the House and Senate before heading to President Donald Trump’s desk for a final decision.
Criticism: A Trojan Horse for a Central Bank Digital Currency?
Not everyone supports the GENIUS Act. Critics argue that the bill may be a covert step toward establishing a central bank digital currency (CBDC) via privatized infrastructure.
Jean Rausis, co-founder of decentralized exchange Smardex, voiced strong opposition, warning that centralized stablecoin frameworks could open the door to government surveillance and financial censorship.
“Centralized stablecoins could allow authorities to freeze accounts or deny access to funds,” Rausis said. “That’s a level of control that risks turning programmable money into programmable restrictions.”
A High-Stakes Debate at the Intersection of Finance and Freedom
As the U.S. edges closer to implementing a national framework for stablecoins, the debate over digital asset regulation, consumer privacy, and the future of money is reaching new levels of urgency.
The GENIUS bill, and the rhetoric surrounding it, reflects a broader conversation about the balance between innovation and oversight—especially as the line between crypto platforms and traditional banking continues to blur.
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