Cryptocurrency regulation in the United States has long been marked by uncertainty, political infighting, and reactionary enforcement. However, stablecoins have emerged as the digital asset class most likely to receive bipartisan and bicameral regulatory clarity in 2025. In the past two weeks, two of the most influential Democrats in Congress—Senator Kirsten Gillibrand (D-NY) and Representative. Maxine Waters (D-CA)—have introduced separate stablecoin bills in their respective chambers of Congress, each aiming to provide a structured regulatory framework for the industry.
What Are Stablecoins
Stablecoins are a type of cryptocurrency designed to keep a steady value, usually by being tied (or “pegged”) to something stable, like the U.S. dollar or gold. This means that for every stablecoin issued, there is usually an equal amount of real-world assets (RWAs) held in reserve to back it up. Notably, most government-issued currencies—including the U.S. dollar, have only a fractional reserve.
In contrast, cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Dogecoin (DOGE) can fluctuate in price a lot because their value depends on market supply and demand. Stablecoins are meant to avoid those wild price swings, making them more useful for everyday transactions, like sending money or making purchases, without worrying about sudden changes in value. Therefore, stablecoins can be a more viable option for new and more risk averse crypto users who may be more interested in, and comfortable with, consumer transactions instead of—or in addition to—investment.
The GENIUS Act
The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, introduced by Senator Gillibrand and co-sponsored by Senators Bill Hagerty (R-TN), Cynthia Lummis (R-WY), and Tim Scott (R-SC), seeks to create a clear, innovation-friendly framework while ensuring consumer protection. It embraces a state-federal regulatory balance, allowing smaller issuers to operate under state supervision while placing larger stablecoin providers under federal oversight.
By contrast, Rep. Waters’ stablecoin bill, described in the press release as the culmination of three years of bipartisan negotiation, takes a more centralized approach. The Waters bill requires all stablecoin issuers—both banks and nonbanks—to be subject to Federal Reserve oversight. The bill also prohibits Big Tech firms from issuing stablecoins, blocks offshore companies from evading U.S. regulations, and prevents individuals convicted of financial crimes from owning more than 5% of a stablecoin issuer.
This bill represents a specific, actionable step beyond Waters’ more general August 2024 statements regarding the need to take a closer, more digital asset and artificial intelligence. “We’ve got to move forward with AI, artificial intelligence, [and]
cryptocurrency,” explained Waters in response to a podcast host’s question regarding legislative priorities if Democrats were to lead the House of Representatives post-2024 election.
Can Competing Visions For Stablecoin Regulation Be Reconciled?
Together, these bills mark a significant shift in the conversation around stablecoins. The debate is no longer about whether stablecoins should be regulated, but how.
Senator Gillibrand made the stakes clear:
“The future of stablecoins and cryptocurrency has strong bipartisan support. This bill will empower responsible innovation, maintain U.S. leadership in digital assets, and keep crypto companies and jobs onshore.”
The GENIUS Act: Gillibrand’s Innovation-First Approach
The GENIUS Act is structured to:
- Provide two regulatory paths for stablecoin issuers: Large issuers (over $10 billion in market capitalization) would be regulated by the Federal Reserve and OCC, while smaller issuers could opt for state-level regulation with limited federal oversight.
- Mandate strict 1-to-1 reserves: All issuers must back their stablecoins with U.S. currency, demand deposits, or short-term Treasury bills, ensuring that each digital dollar is redeemable on demand.
- Prohibit algorithmic stablecoins: This measure explicitly bans self-referential, unbacked stablecoins, preventing a repeat of the Terra/Luna collapse that erased billions in investor wealth.
- Ensure U.S. dollar dominance: Gillibrand has consistently framed stablecoin regulation as an economic and geopolitical imperative, arguing that without clear rules, the U.S. risks losing ground to China’s digital yuan and the European Union’s comprehensive crypto framework.
Gillibrand’s state-friendly, innovation-driven approach seeks to balance financial stability with economic competitiveness, ensuring that stablecoin issuers are properly regulated without suffocating the industry.
“Stablecoins aren’t just about crypto—they are about maintaining the strength of the U.S. dollar in an increasingly digital global economy,” she said.
Rep. Maxine Waters’ Bill: Stricter Oversight, Consumer Protections, And Big Tech Restrictions
By contrast, Rep. Waters’ bill takes a more centralized, enforcement-heavy approach. Key provisions include:
- All issuers, regardless of size, must be federally regulated: Unlike the GENIUS Act, state-level regulation is not an option.
- Big Tech is explicitly banned from issuing stablecoins: This prevents companies like Meta, Google, and X from creating corporate-controlled digital currencies.
- Tight restrictions on offshore issuers: The bill closes regulatory loopholes that allowed firms like Tether to operate with minimal U.S. oversight, strengthening enforcement against noncompliant foreign entities.
- Criminal background checks for stablecoin issuers: The bill prevents individuals convicted of financial crimes—including fraud and money laundering—from owning more than 5% of a stablecoin company.
Waters has framed the bill as a consumer protection measure:
“This draft bill fosters innovation, while properly addressing and prioritizing concerns I have long held about safeguarding our nation’s consumers from scams that have plagued the crypto industry.”
Stablecoins As A Bridge To Crypto Mass Adoption
While institutional adoption of crypto has surged, average consumers remain hesitant to enter the space. Poor user experience, regulatory uncertainty, and a legacy of fraud and instability have created a significant trust deficit.
Stablecoins could be the first widely adopted digital financial product, serving as a low-risk entry point into crypto for mainstream users.
- Familiarity and Stability: Unlike volatile cryptocurrencies, stablecoins retain a fixed value, making them more accessible to consumers unfamiliar with digital assets.
- Lower Costs for Payments and Remittances: Stablecoins offer cheaper and faster transactions, particularly for underbanked communities and those sending money internationally.
- A Digital On-Ramp for Traditional Finance Users: As stablecoins gain mainstream use, they could drive further adoption of blockchain-based financial services.
Yet without clear, consumer-friendly regulation, stablecoins will remain largely confined to institutional use, excluding the very people they were meant to serve.
A Defining Moment For Stablecoin Regulation
The introduction of both the GENIUS Act and Rep. Waters’ stablecoin bill marks a turning point for digital asset regulation in the United States. With two top Democrats proposing vastly different approaches, the final framework that emerges from Congress will shape the future of stablecoins, crypto adoption, and the global role of the U.S. dollar.
To move forward effectively:
- Congress must balance consumer protection with innovation, preventing fraud without stifling competition.
- The crypto industry must engage proactively, advocating for a regulatory framework that fosters accessibility and trust.
- Stablecoins must be positioned as a financial tool for all Americans—not just institutions and high-net-worth investors.
Stablecoins represent a critical intersection of financial inclusion, technological advancement, and regulatory oversight. As policymakers clarify and refine their approaches, a well-crafted regulatory framework could determine whether stablecoins become a widely used financial tool or remain an underutilized innovation.
Ensuring the right balance of oversight and flexibility will be key to determining whether stablecoins unlock broader crypto adoption—or remain an opportunity unrealized.