This week, U.S. Congressman French Hill announced the formation of a new congressional working group focused on developing a regulatory framework for digital assets and stablecoins.
“We don’t want to be behind in financial technology and digital assets in the United States,” Hill said.
The working group will include input from the House Financial Services Committee, House Agriculture Committee, Senate Banking Committee, and Senate Agriculture Committee.
Stablecoins, or cryptocurrency pegged to a stable asset like the U.S. dollar or gold, have grown into a $227 billion market, according to CoinMarketCap. Despite this rapid growth, U.S. regulation has lagged due to jurisdictional disputes and differing views on oversight.
On Tuesday, White House AI and crypto czar David Sacks said they were a top priority for the executive crypto working group, particularly as a tool for reinforcing American leadership in the digital asset space.
“While using stablecoins to reinforce U.S. dollar dominance is a smart strategy, it comes with significant risks,” Laurenth Alba, the Head of Business Development at Rome Protocol, told TheStreet Crypto. “If stablecoins become deeply integrated into the U.S. financial system, they could strengthen the dollar globally — but the government will also want control over issuance.”
Congress took a legislative step forward this week with the introduction of the GENIUS Act (the Guiding and Establishing National Innovation for U.S. Stablecoins Act), a bill proposed by U.S. Senator Bill Hagerty to establish a regulatory framework for stablecoins.
The crypto industry cheered the move. “At Telcoin, we are excited about the stablecoin legislation introduced this week, which aligns with state-level initiatives like Nebraska’s Digital Asset Bank framework,” Paul Neuner, CEO of Telcoin, told TheStreet Crypto.
“A fully regulated stablecoin market is a key driver to bringing institutions into crypto,” Eli Cohen, General Counsel of Centrifuge, told TheStreet Crypto. “The safety and security of using a regulated product as the building block for transactions will make the whole market work better.”
“This looks like a good bill, which should garner bipartisan support, so it could move forward quickly,” Cohen added.
However, some in the industry question the bill’s limitations. “Monthly audited statements and regulatory monitoring are an important start for stablecoins — but they could go further,” Jason Rozovsky, Head of Legal at Interop Labs told TheStreet Crypto. “The GENIUS Act should require stablecoin issuers to use public blockchain infrastructure, end to end. This is the only way to ensure a global, public ‘proof of reserve’ and tracking of assets for AML [anti-money laundering] purposes across any network, and truly achieve the goal of a technology innovation that advances the dollar and U.S. Treasuries on a global scale.”
Despite the focus on using stablecoins to strengthen the U.S. dollar, this has invited mixed reactions. “Higher demand for T-bills would cause their prices to go up, which in turn pushes yields down and lowers interest rates,” Todd Ruoff, CEO of Autonomys, told TheStreet Crypto. “It’s still very early on in the new administration, but this was their way of letting the market know they are at least thinking about solutions. Given we are only two weeks in, and considering the last four years, I think that’s as much as one could ask for.”