The underperformance of legacy systems in terms of cost and convenience has made the existing banking sector feel threatened by blockchain alternatives.
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act is being opposed by bankers and their supporters in the US Senate because of concerns that stablecoins may disintermediate banks and reduce their market share.
The law needs 60 votes to pass the Senate, which means that at least seven Democrats must join Republicans in order for the Act to be passed, according to an American Banker article.
Since US Senator Elizabeth Warren, one of the most vocal political opponents of cryptocurrency, is putting out an amendment that would forbid tech companies from producing stablecoins, this might prove to be a challenging proposition. Warren penned:
“These companies must collaborate with or enable transactions between licensed financial institutions if they wish to conduct payments. However, by allowing large IT firms and other commercial giants to create their own stablecoins, this stablecoin bill disrupts the existing quo.
Due to its near-instant settlement times and lower transaction costs, which greatly lessen the burden of cross-border payments and enable peer-to-peer transactions, digital assets continue to be a disruptive force in banking and finance.
Related: DeFi exec, a CBDC trojan horse, is the GENIUS stablecoin bill.
On February 4, Senator Bill Hagerty submitted the GENIUS stablecoin bill, which would provide a complete legislative framework for US dollars that have been tokenized.
Christopher Waller, the governor of the Federal Reserve Bank, stated that non-banks need to be permitted to create stablecoins shortly after the measure was presented to the US Senate.
Waller said that because stablecoins are efficient and cost-effective, they might increase the use cases for payments, especially in poor nations.
costs associated with stablecoins over traditional payment processing methods. Source: Simon Taylor At the Economic Club of Washington, DC, firm of America CEO Brian Moynihan hinted that the firm would go into the stablecoin space by introducing its own dollar-pegged stable token.
During the first White House Crypto Summit on March 7, Treasury Secretary Scott Bessent claimed the US will deploy stablecoins to extend US dollar supremacy.
Together, overcollateralized stablecoin issuers rank as the 18th largest purchasers of US government debt globally, surpassing nations like as South Korea and Germany.
The US government may utilize stablecoins as a sponge to absorb inflation and preserve the dollar’s position as the world’s reserve currency by enacting pro-stablecoin legislation and encouraging stablecoin adoption globally.
Magazine: Unstablecoins: Bank runs, depegging, and other dangers are imminent
