This week, Congress has a rare opportunity to move forward on key legislation that could shape the future of stablecoins and digital asset markets. Coinbase CEO Brian Armstrong is calling on the Senate to begin debate on the GENIUS Act, a bill aimed at establishing clear rules for stablecoin issuers.
To get things moving, the Senate needs at least 60 votes. At the same time, there is growing support in the House to build on recent momentum from the FIT21 framework.
The GENIUS Act lays out a federal licensing process for stablecoin issuers, requires issuers to hold enough reserves to protect consumers and introduces a dual regulatory structure – larger issuers would be overseen by federal regulators, while smaller ones could remain under state supervision.
Backing the push for legislation is a new report from the U.S. Treasury Department, which projects that the stablecoin market could grow from $230 billion today to $2 trillion by 2028. That growth is expected to come from greater regulatory clarity, rising demand from institutions, the spread of tokenized funds and increasing real-world use cases.
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But the report also points out how this growth could affect traditional banks. Since a lot of stablecoins are backed by short-term U.S. government debt, if demand for those securities goes up, it could pull deposits away from banks, especially when those assets are earning interest.
Stablecoins could be a threat to bank liquidity because they are so easy to use. Banks might have to do one of two things in response: raise deposit rates or find new ways to stay competitive.
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The Treasury sees stablecoins as more than just a new digital payment tool. They see them as potential rivals to banks and a new way to export the U.S. dollar globally.
With the August recess coming up, there is not a lot of time. Lawmakers in both chambers are being asked to act quickly to pass stablecoin legislation that brings much-needed clarity, protects consumers and keeps the U.S. at the forefront of digital finance.